Bad Debt Expense and AFDA
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FCB Corporation began its fiscal year 2023 with a balance of $475,000 in the Trade Receivables account and a balance of $33,000 in the Allowance for Doubtful Accounts. During 2023, FCB had credit sales of $6,675,000.
Also during the year, the company wrote off $35,500 of accounts receivable that were deemed to be uncollectible, although one customer whose $4,000 account had been written off that same year surprised management by paying the amount in full in late September. The total cash collected throughout 2023 amounted to $6,568,500, which includes the surprise $4,000. FCB’s objective is to collect its receivables every 30 days (the industry’s average collection period is 32 days).
In preparation for the audited year-end financial statements, the controller prepared the following list of trade receivables at December 31, 2023, grouped by age:
FCB’s management determined that all trade receivables that have been outstanding for more than 75 days are definitely uncollectible.
Prepare the necessary journal entries to record bad debt expense for the year ended December 31, 2023.
Transactions:
| Account | Debit | Credit |
|---|---|---|