Question

Teddy Company began operations on January 1, 20X1. The companyhas an accounts receivable balance of $426900 at the end of itsaccounting period on December 31, 20X1. This balance includes somepast due accounts. Based on industry averages, Teddy estimates that$19420 of the December 31 accounts receivable will becomeuncollectible. At this time, Teddy Company ________ which customeraccounts will become uncollectible. The adjusting entry that TeddyCompany should record for bad debt expense on December 31, 20X1 is:12/31/X1 _____________ DR_________ _____________ CR__________ Onthe income statement, the Bad Debt Expense will be matched against_______. On the balance sheet, the Allowance for Doubtful Accountswill be _______ the balance in Accounts Receivable. This amount iscalled the _________ and represents the amount that the company________ to collect on its accounts receivable. Teddy Company'sAccounts Receivable and Allowance for Doubtful Accounts on December31, 20X1, before adjusting entries, are shown below. Update theseT-accounts for the adjusting entry for Bad Debt Expense, showingthe balance in Teddy Company's Accounts Receivable and Allowancefor Doubtful Accounts after adjusting entries have been made.Accounts Receivable 12/31/X1 $426900 12/31/X1 ________ Allowancefor Doubtful Accounts 1/1/X1 $0 adjusting entry ______ 12/31/X1______ Determine the amount of Bad Debt Expense that Teddy Companyshould report in its 20X1 income statement and the net realizablevalue of Teddy Company's Accounts Receivable after the adjustingentry is made on December 31, 20X1. Income Statement: Bad DebtExpense $_______ Balance Sheet: Accounts Receivable, Dec. 31, 20X1$_______ Less: Allowance for Doubtful Accounts Net Realizable Valueof Accounts Receivable, Dec. 31, 20X1 $_______ At a(n) ________point in the future, specific customer accounts will be determinedto be uncollectible. At that point in time, the specific accountreceivable is written off by debiting ________ and crediting________. On January 12, 20X2, J. Thorleif's account balance of$5,530 with Teddy Company is determined to be uncollectible.Provide the journal entry to write-off J. Thorleif's accountreceivable on January 12, 20X2: 1/12/X2 ___________ DR_____________________ CR__________ Teddy Company's Accounts Receivable andAllowance for Doubtful Accounts on December 31, 20X1, afteradjusting and closing entries, are shown below. Update theseT-accounts for the write-off of the J. Thorleif account receivable,showing the balance in Teddy Company's Accounts Receivable andAllowance for Doubtful Accounts immediately following thewrite-off. Accounts Receivable 12/31/X1 _________ 1/12/X2__________ 1/12/X2 _________ Allowance for Doubtful Accounts12/31/X1 ___________ 1/12/X2 __________ 1/12/X2 ___________ ExpertAnswer