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Please help me solve these questions. Thank you!
Firefox File Edit View History Bookmarks Tools Window Help 53% L%), Sun 5:04 PM Anmol Ali E Ttol CH 7: Homework with Video As WileyPLUs Q Chapter 7: Cash and Receivabl + × https://edugen.wileyplus.com/edugen/lti/main.uni Backi oard LearnHuskyNetHBU Portal 90% asearch * Most Visited N Netflix YouTube Mail aliar1@hbu.edu tEbay a Amazon.com Student Dashboard "StockTwits Home Chegg.com the watchseries WileyPL Nete satemscdistr ameunting1 Problem 7-7 Video Assistance Exercise 7-9 on October 1, 2017, whispering Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc. In lieu or a cash payment Valco Brothers Farm gave Arden a 2-year, s190 800 10% note a realistic rate of interest for a note of this type). The note required interest to be paid annually on October 1. Whispering's financial statements are prepared on a calendar-year basis. Assuming Valco Brothers Farm fulfills all the terms of the note, prepare the necessary journal entries for Whispering Equipment Company for the entire term of the note. Assume that reversing entries are not made on January 1, 2018 and January 1, 2019. (Record journal entrles in the order presented in the problem. If no entry is required, select "No Entry for the account titles and enter 0 for the amounts, Credit account titles are automaticaNy Indented when the amount is entered, Do not indent manually.) Date Account Titles and Explanation Debit Credit Review Results To record the collection of interest) (To record the collection of the nate) 50447#Explanation / Answer
Part (a) – Record the estimated bad debt
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.
Estimated Uncollectible Amount = Accounts Receivable Gross x 4% = $80,700 x 4% = $3,228
Allowance for doubtful accounts has Debit balance of $3,070. Normally this account is having credit balance. Now we need to adjust this account to make it credit balance $3,228
We need to Credit Allowance for Doubtful Account with $6,298 (3,228 + 3070) and Debit Bad Debt Expense with $6,298
Journal Entry will be as follows
No.
Account Titles and Explanation
Debit
Credit
(a)
Bad Debt Expense
$6,298
Allowance for Doubtful Account
$6,298
Part (b) – Record the estimated bad debts
Outstanding Gross Accounts Receivable at the end of year = $80,700
Estimated Uncollectible Amount = 5% of Outstanding Balance of Accounts Receivable 80,700 = $4,035
Allowance for doubtful accounts has Credit balance of $1,609. Normally this account is having credit balance. Now we need to adjust this account to make it credit balance $4,305
We need to Credit Allowance for Doubtful Account with $2,426 (4,305 – 1,609) and Debit Bad Debt Expense with $2,426
Journal Entry will be as follows
No.
Account Titles and Explanation
Debit
Credit
(b)
Bad Debt Expense
$2,426
Allowance for Doubtful Account
$2,426
No.
Account Titles and Explanation
Debit
Credit
(a)
Bad Debt Expense
$6,298
Allowance for Doubtful Account
$6,298