Question

In: Accounting

A)History indicates that 8 % of a company's net sales are uncollectible. The balance of accounts...

A)History indicates that 8 % of a company's net sales are uncollectible. The balance of accounts receivables is $ 111,900. The company sales are $ 811,900 and sales returns and allowances are 27,200. If Allowance for Doubtful Accounts has a $ 3,600 credit balance, the adjustment, rounding to the nearest one dollar, to record the estimate for bad debts for the period will require a credit to the Allowance of Doubtful Accounts of $

B) History indicates that 6 % of a company's accounts receivable are uncollectible. The balance of accounts receivables is $ 246,600. If Allowance for Doubtful Accounts has a $ 1,600 credit balance, the adjustment, rounding to the nearest one dollar, to record the estimate for bad debts for the period will require a credit to the Allowance of Doubtful Accounts of $

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Expert Solution

A)

8% of a company's net sales are uncollectible.

Sales = $ 811,900

Sales returns and allowances = $27,200

Allowance for Doubtful Accounts = $3,600 credit balance

Net sales = Sales - Sales returns and allowances

= 811,900 - 27,200

= $784,700

Bad debt expense = Net sales x Percentage uncollectible

= 784,700 x 8%

= $62,776

The adjustment, to record the estimate for bad debts for the period will require a credit to the Allowance of Doubtful Accounts of $62,776

B)

6% of a company's accounts receivable are uncollectible.

Accounts receivables = $ 246,600.

Allowance for Doubtful Accounts = $1,600 credit balance

Bad debt expense = (Accounts receivables x Percentage uncollectible) - Existing balance in Allowance for Doubtful Accounts

= (246,600 x 6%) - 1,600

= 14,796 - 1,600

= $13,196

The adjustment to record the estimate for bad debts for the period will require a credit to the Allowance of Doubtful Accounts of $13,196

ekkarill92 answered 2 years ago

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