At the end of the prior year, durney's outdoor outfitters reported the following information. accounts receivable, dec. 31, prior year accounts receivable (gross) (a)$48,283allowance for doubtful accounts (xa) 8,474accounts receivable (net) (a)$39,809 during the current year, sales on account were $306,673, collections on account were $290,750, write-offs of bad debts were $7,059, and the bad debt expense adjustment was $4,775. required: 1-a. complete the accounts receivable and allowance for doubtful accounts t-accounts to determine the balance sheet values. disregard income tax considerations.1-b. complete the amounts related to accounts receivable and bad debt expense that would be reported on the income statement for the current year.1-c. complete the amounts related to accounts receivable and bad debt expense that would be reported on the balance sheet for the current year.

1-a. Complete the Accounts Receivable and Allowance for    

Doubtful Accounts T-accounts to determine the balance sheet values.  

Dr Bad Debt Expense$ 4.775  

1-c. Complete the amounts related to Accounts Receivable and  

Bad Debt Expense that would be reported on the BALANCE SHEET for the current year.  

Cr Allowance for Uncollectible Accounts$ 6.190

Dr Accounts Receivable  $ 57.147

Explanation:

Dr Accounts Receivable  $ 48.283

Cr Allowance for Uncollectible Accounts$ 8.474

Dr Accounts Receivable NET$ 39.809

Dr Accounts Receivable  $ 306.673

Sales$ 306.673

Dr Cash$ 290.750

Cr Accounts Receivable  $ 290.750

Dr Allowance for Uncollectible Accounts$ 7.059

Cr Accounts Receivable  $ 7.059

Dr Bad Debt Expense$ 4.775

Cr Allowance for Uncollectible Accounts$ 4.775

Doubtful Accounts T-accounts to determine the balance sheet values.  

Dr Bad Debt Expense$ 4.775

Bad Debt Expense that would be reported on the BALANCE SHEET for the current year.  

Cr Allowance for Uncollectible Accounts$ 6.190  

Dr Accounts Receivable  $ 57.147  

Accounts Rec  

$ 48.283  Debit Initial Balance  

$ 306.673Debit Sales  

$ 290.750Credit Collections  

$ 7.059    Credit Write Off  

$ 57.147  DEBIT Balance  

Allowance for Doubtful Accounts

$ 8.474Credit Initial Balance

$ 7.059Debit Write Off

$ 4.775Credit Bad Debt Adj.

$ 6.190CREDIT Balance

Bad accounts are those credits granted by the company and there is no possibility of being charged.

When customers buy products on credits but the company cannot collect the debt, then it's necessary  to cancel the unpaid invoice as uncollectible.

One way is to directly cancel bad debts at the time it was decided that the credit is bad, the total amount reported as bad debt expenses negatively affect the income statement and the accounts receivable are reduced by the same amount, less assets

The other way is to determine a percentage of the total amount of accounts receivable as bad debts, there are many ways to analyze accounts receivable and calculate the value of bad debts.

When the company has the percentage of uncollectible accounts, the required journal entry is Bad Expenses (debit) with Reserve for Bad Accounts (credit)

At the time of cancellation, since the expenses were recognized before, we only use the Allowance for Uncollectible Accounts (Debit)  with accounts receivable (credit), with this we are recognizing the bad credit of the company.

the answer is: a greater percentage chance of loss

high risk investments had the characteristic of higher percentage of great return accompanied with higher percentage chance of loss.

this type of investments usually only suitable for investors that have enough capital to survive in case one or more of their investments fail. examples of high-risk investments are stocks and currencies.