Question

At December 31, Folgeys Coffee Company reports the following results for its calendar year.

Cash sales	$	919,000
Credit sales		319,000

Its year-end unadjusted trial balance includes the following items.

Accounts receivable	$	144,000	debit
Allowance for doubtful accounts		6,900	debit

Prepare the adjusting entry to record bad debts expense assuming uncollectibles are estimated to be (a) 6% of credit sales, (b) 4% of total sales and (c) 9% of year-end accounts receivable.

Record Bad Debts Expense assuming uncollectibles are estimated to be 6% of credit sales.

Record Bad Debts Expense assuming uncollectibles are estimated to be 4% of total sales.

Record Bad Debts Expense assuming uncollectibles are estimated to be 9% of year-end accounts receivable.

Answer 1

• All working forms part of the answer
• Requirment ‘a’

A	Total Credit Sale	$        319,000.00
B = A x 6%	Bad Debt Expense	$          19,140.00
Accounts title	Debit	Credit
Bad Debt Expense	$           19,140.00
Allowance for Doubtful Accounts		$          19,140.00

• Requirement ‘b’

A = 919000 + 319000	Total Sales	$ 1,238,000.00
B = A x 4%	Bad Debt Expense	$        49,520.00
Accounts title	Debit	Credit
Bad Debt Expense	$         49,520.00
Allowance for Doubtful Accounts		$        49,520.00

• Requirement ‘c’

A	Accounts receivables balance	$          144,000.00	Debit
B = A x 9%	Adjusted Balance in Allowance account required	$            12,960.00	Credit
C	Unadjusted balance in Allowance Account	$               6,900.00	Debit
D = B+C	Bad Debt Expense	$            19,860.00

Accounts title	Debit	Credit
Bad Debt Expense	$               19,860.00
Allowance for Doubtful Accounts		$            19,860.00