Question
In: Accounting
At the end of the current year, the accounts receivable account has a debit balance of...
At the end of the current year, the accounts receivable account has a debit balance of $1,095,000 and sales for the year total $12,420,000.
- The allowance account before adjustment has a debit balance of $14,800. Bad debt expense is estimated at 3/4 of 1% of sales.
- The allowance account before adjustment has a debit balance of $14,800. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $47,400.
- The allowance account before adjustment has a credit balance of $5,300. Bad debt expense is estimated at 1/4 of 1% of sales.
- The allowance account before adjustment has a credit balance of $5,300. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $44,000.
Solutions
Expert Solution
Determination of the amount of the adjustment entry to provide for doubtful accounts:
A) Amount of the adjustment entry to be provided for doubtful accounts:
It is equal to the estimated bad debt expense
= (Sales × 1%) × (1/4)
= ($12420000×1%) × (1/4)
= $124200×(1/4)
= $31050
B) Amount of adjustment entry to be provided for doubtful accounts:
It is equal to the estimated amount of doubtful accounts in addition to the the debit balance amount in allowance account.
= $47400+$14800
= $62200
*$14800 has been added since the allowance account has debit balance
C) Amount of the adjustment entry to be provided for doubtful accounts:
It is equal to the estimated bad debts expense
= (Sales × 1%) × (3/4)
= ($12420000×1%)×(3/4)
= $124200×(3/4)
= $93150
D) Amount of the adjustment entry to be provided for doubtful accounts:
It is equal to the estimated amount of doubtful accounts after deducting the credit balance amount in allowance account
= $60600 - $7300
= $53300
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ekkarill92 answered 2 years agoRelated Solutions
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