The December 31, 2013 Statement of Financial Position of Howson

question 105

Essay

The December 31, 2013 statement of financial position of Howson Limited had Trade Accounts Receivable of $450,000 and a credit balance in Allowance for Doubtful Accounts of $45,000. During 2013, the following transactions occurred: service revenue billed on account, $1,500,000; collections from customers,
$1,300,000; accounts written off $37,000; previously written off accounts of
$4,000 were collected.
Required:
(a) Record the 2013 transactions.
(b) If the company uses the percentage of receivables basis to estimate bad debts expense and determines that uncollectible accounts are expected to be 5% of trade accounts receivable, what is the adjusting entry at December 31, 2013?

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