Problem 8-5A At December 31, 2014, the trial balance of Sloane Company contained
ID: 2559320 • Letter: P
Question
Problem 8-5A At December 31, 2014, the trial balance of Sloane Company contained the following amounts before adjustment Debit Credit Accounts Receivable Allowance for Doubtful Accounts Sales Revenue $180,000 1,500 875,000 (a) Prepare the adjusting entry at December 31, 2014, to record bad debts expense, assuming that the aging schedule indicates that $10,200 of accounts receivable will be uncollectible (b) Repeat part (a), assuming that instead of a credit balance there is a $1,500 debit balance in Allowance for Doubtful Accounts. (c) During the next month, January 2015, a $2,100 account receivable is written off as uncollectible. Prepare the journal entry to record the write-off. (d) Repeat part (c), assuming that Sloane Company uses the direct write-off method instead of the allowance method in accounting for uncollectible accounts receivable (Credit account titles are automatically indented when amount is entered. Do not indent manually) No. Account Titles and Explanation Debit Credit M)Explanation / Answer
Solution:
Journal Entries - Sloane Company Event Particulars Debit Credit a Bad Debts Expense Dr ($10,200 - $1,500) $8,700.00 To Allowance for doubtful accounts $8,700.00 (Being bad debts expense recorded) b Bad Debts Expense Dr ($10,200 + $1,500) $11,700.00 To Allowance for doubtful accounts $11,700.00 (Being bad debts expense recorded) c Allowance for doubtful accounts Dr $2,100.00 To Accounts receivables $2,100.00 (Being bad debts write off) d Bad Debts Expense Dr $2,100.00 To Accounts receivables $2,100.00 (Being bad debts write off)