Check Dr. Bad debts expense (1b) $35,505 At December 3J, 2015, Ingleton Company
ID: 2453918 • Letter: C
Question
Check Dr. Bad debts expense (1b) $35,505 At December 3J, 2015, Ingleton Company reports the following results for the year: In addition, its unadjusted trial balance includes the following items: Prepare the adjusting entry for Ingleton Co. to recognize bad debts under each of the following independent assumptions. Bad debts are estimated to be 2.5% of credit sales. Bad debts are estimated to be 1.5% of total sales. An aging analysis estimates that 6% of year-end accounts receivable are uncollectible. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31. 2015, balance sheet given the facts in part 1a. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31 2015, balance sheet given the facts in part 1c.Explanation / Answer
Answer for question no.1.a):
As there is already a provision for $7,500, provision needs to be created for the balance of $1,342,000*2.5% =$33.550 -$7,500. = $26,050
b) As there is already a provision for $7,500, provision needs to be created for the balance of ($1,025,000+$1,342,000)*1.5% -7,500. =$28,005
C:
As there is already a provision for $7,500, provision needs to be created for the balance of $575,000*6% -$7,500. =$27,000.
Answer for question no.2:
Answer for question no.3:
Date Entry Debit Credit For bad debts allowance xx/xx/xxxx Bad debts expense a/c Dr $26,050.00 To allowance for bad debts a/c Cr $26,050.00 (Being allowance created for bad debts)