Question
In: Accounting
(Bad Debt Adjustment) The balance in accounts receivable at December 31 was $260,000. The allowance account...
(Bad Debt Adjustment)
The balance in accounts receivable at December 31 was $260,000. The allowance account has a debit balance of $7,500 before the year end adjustment. Sales for the year were $985,000. Prepare the adjusting entry for each of the following independent situations:
a. 3% of outstanding accounts receivable are uncollectible
b. 1.5% of sales are uncollectible
c. An aging of the accounts show that $8,000 of the accounts receivable are uncollectible
Solutions
Expert Solution
| a | Bad Debt Expense Dr | 300 | |
| Allowance for Doubtful Accounts Cr | 300 | ||
| 260000 * 3% - 7500 | |||
| b | Bad Debt Expense Dr | 7,275 | |
| Allowance for Doubtful Accounts Cr | 7,275 | ||
| 985000*1.5% - 7500 | |||
| c | Bad Debt Expense Dr | 8,000 | |
| Allowance for Doubtful Accounts Cr | 8,000 | ||
| Total Allowance for Doubt ful debt (7500+8000) | |||
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