Problem 7 (5 Points) Before year-end adjusting entries, Dunn Company\'s acoour u
ID: 2577806 • Letter: P
Question
Problem 7 (5 Points) Before year-end adjusting entries, Dunn Company's acoour uncolectible andicated thate $125,000 of the December 31 e to get 2017, for accounts receivable and the related allowanc receivable $1,500,000 and $90,000, respectively. An aging of balances at December 31 t creditf accounts receivable ables are expected to be uncollectible. The net work receivable after adjustment is, You MUST show your Problem 8 (5 Points) The following information is available for Murphy Company: Allowance for doubtful accounts at December 31, 2016 Credit sales during 2017 Accounts receivable deemed worthless and written off during 2017 $ 24,000 1,200,000 27,000 As a result of a review and aging of accounts receivable in early January 2018, it has been determined that an allowance for doubtful accounts of $16,000 is needed at December 31, 2017. Prepare the journal entry that Murphy should record as "bad debt expense" for the year ended December 31, 2017? You MUST show your work to get credit.Explanation / Answer
Problem 7
Allowance for Doubtful Account Method
Under Allowance for Doubtful Debt method, the company uses an estimate for allowance for doubtful debt by using specified method and accordingly book Bad Debt Expenses for the period.
Allowance method creates bad debts expenses before the company knows specifically which customers will not pay on the basis of prior history and prior experience.
The estimated Uncollectible Amount = $125,000
Hence, the Net realizable value of Accounts Receivable after adjustment is = Accounts Receivable $1,500,000 – Allowance for Uncollectible Account $125,000
= $1,375,000
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