Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on i
ID: 2469326 • Letter: S
Question
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. Required: Prepare the adjusting entry for this company to recognize Bad debts under each of the following independent assumptions. Bad debts are estimated to be 2% of credit sales. Bad debts are estimated to be 1% of total sales. An aging analyses estimates that 5% of year-end accounts receivable are uncollectible. Adjusting entries {all dated December 31. 2015).Explanation / Answer
Ans:
Question 1 a. Credit Sales $3,971,000 Bad Debt @ 2% on Credit Sales $79,420 Less: Beginning Balance $13,870 Procission required $65,550 Adjusting Journal Entries: Bad Debt Expenses $65,550 Allowence for Doubtful Debts $65,550 Question 1b. Total Sales $5,661,960 Bad Debt @ 1% on Total Sales $56,620 Less: Beginning Balance $13,870 Procission required $42,750 Adjusting Journal Entries: Bad Debt Expenses $42,750 Allowence for Doubtful Debts $42,750 Question 1c. Accounts Receivable $1,203,213 Bad Debt @ 5% on Accounts Receivable $60,161 Less: Beginning Balance $13,870 Procission required $46,291 Adjusting Journal Entries: Bad Debt Expenses $46,291 Allowence for Doubtful Debts $46,291