Benny Company had a beginning balance on January 1, 2019 in Accounts Receivable of $200,000 and...

Benny Company had a beginning balance on January 1, 2019 in Accounts Receivable of $200,000 and a beginning credit balance in the Allowance for Doubtful Accounts of $4,000. During 2019, Drew sold $1,000,000 of goods on credit and collected $800,000. If Drew estimates that 2% of their ending accounts receivable will eventually not be collected, the adjusting journal entry for the Bad Debt Expense will include a credit to Allowance for Doubtful Accounts of A. none of the listed choices B. $ 6,980 C. $ 8,000 D. $ 4,000 E. $ 16,000

Solutions

Expert Solution

Notes: 1	CALCULATION OF BAD DEBT EXPENSES ON THE BASIS OF % OF ACCOUNT RECEIVABLE

	Beginning Balance of account receivable	$ 2,00,000
	Add: Sales of the year	$ 10,00,000
	Total	$ 12,00,000
	Less: Cash Collected	$ 8,00,000
	Ending Account Receivable	$ 4,00,000
	Estimated that 2% of $ 400,000 will be uncollectable	$ 8,000
	Less: Balance available in Allowance account	$ 4,000
	Net balance need to take adjusted as on 12/31/2018	$ 4,000

Solution:	Journal Entry of the above will be passed as below,


Date	Particulars	Debit	Credit

Oct, 01	Bad Debts Expenses account	$4,000
	Allowance for Doubtful Debts		$4,000



	Answer = Choice D = $ 4,000

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Blossom Company had accounts receivable of $200,000 on January 1, 2020. The only transactions that affected...

Blossom Company had accounts receivable of $200,000 on January 1, 2020. The only transactions that affected accounts receivable during 2020 were net credit sales of $1,125,000, cash collections of $1,025,000, and accounts written off of $50,000. Compute the ending balance of accounts receivable. Ending balance of accounts receivable $ LINK TO TEXT Compute the accounts receivable turnover for 2020. (Round answer to 0 decimal places, e.g. 25.) Accounts receivable turnover LINK TO TEXT Compute the average collection period in days....

At the beginning of the current period, Hughes Corp. had balances in accounts receivable of $200,000...

At the beginning of the current period, Hughes Corp. had balances in accounts receivable of $200,000 and in allowance for doubtful account of $9,000 (credit) Prepare the entries to record the following tracsactions during the period. 1) Hughes has net credit sales of $800,000 and collections of $743,000 2)Hughes wrote off as uncollectible account receivable of $7,000 3) A $4,000 account previously written off as uncollectible was recovered before the end of the current period 4) uncollectible account are estimated...

At the beginning of the current period, Rose Corp. had balances in Accounts Receivable of $200,000...

At the beginning of the current period, Rose Corp. had balances in Accounts Receivable of $200,000 and in Allowance for Doubtful Accounts of $9,000. During the period, it had credit sales of $800,000 and collections of $763,000. It wrote off as uncollectible accounts receivable of $7,300. Uncollectible accounts are estimated to total $25,000 at the end of the period. (Omit recording cost of goods sold.) Instructions Record sales and collections during the period. Record the write-off of uncollectible accounts during...

At the beginning of the current period, Emler Corp. had balances in Accounts Receivable of $200,000...

At the beginning of the current period, Emler Corp. had balances in Accounts Receivable of $200,000 and in Allowance for Doubtful Accounts of $9,000 (credit). During the period, it had net credit sales of $650,000 and collections of $590,000. It wrote off as uncollectible accounts receivable of $5,000. However, a $3,000 account previously written off as uncollectible was recovered before the end of the current period. Uncollectible accounts are estimated to total $20,000 at the end of the period. Instructions...

On January 1, 2019, Wildhorse Co. had Accounts Receivable $144,300, Notes Receivable $30,000, and Allowance for...

On January 1, 2019, Wildhorse Co. had Accounts Receivable $144,300, Notes Receivable $30,000, and Allowance for Doubtful Accounts $18,300. The note receivable is from Willingham Company. It is a 4-month, 9% note dated December 31, 2018. Wildhorse Co. prepares financial statements annually at December 31. During the year, the following selected transactions occurred. Jan. 5 Sold $24,700 of merchandise to Sheldon Company, terms n/15. 20 Accepted Sheldon Company’s $24,700, 3-month, 8% note for balance due. Feb. 18 Sold $13,600 of...

Garham Company had $360,000 in sales on account last year. The beginning accounts receivable balance was...

Garham Company had $360,000 in sales on account last year. The beginning accounts receivable balance was $20,000 and the ending accounts receivable balance was $36,000. The company's average collection period (age of receivables) was closest to: 20.28 days. 28.39 days. 36.50 days. 56.78 days.

At December 31, 2019, Bedford Company had a balance of $248,100 in its Accounts Receivable account...

At December 31, 2019, Bedford Company had a balance of $248,100 in its Accounts Receivable account and a credit balance of $900 in its Allowance for Doubtful Accounts account. Bedford analyzed and aged its accounts receivable based on the following estimated uncollectible amounts: Age of Accounts Receivables Balance Estimated % Uncollectible Current $ 130,500 0.6% 31 to 60 day 66,300 2.0% 61 to 90 days 26,700 5.5% Over 91 days 24,600 21.0% Total $248,100 The company bases its provision...

On January 1, 2019, Big Red, Inc. had gross accounts receivable of $450,000 and a credit...

On January 1, 2019, Big Red, Inc. had gross accounts receivable of $450,000 and a credit balance in the allowance for doubtful accounts of $52,500. During 2019 the following activity occurred: Sales made on credit totaled $6,500,000 Cash collections on credit sales totaled $6,618,000 Account balances written off: $74,000. On December 28, 2019, $27,000 previously written off was collected. Big Red, Inc. uses the Percentage of credit sales method to account for bad debt. Required: 1. Prepare the journal entries...

Jupiter Corporation had $8,500 balance in accounts receivable at the beginning of the current year. The...

Jupiter Corporation had $8,500 balance in accounts receivable at the beginning of the current year. The beginning balance of allowance for doubtful accounts was $2,000. Early in January, $500 worth of receivable were written off as uncollectible. What is the net realizable value of accounts receivable, after the write off? Select one: a. $7,000 b. $1,500 c. $8,000 d. $6,500 e. $6,000

At the beginning of the year, Tennyson Auto Parts had an accounts receivable balance of $31,800...

At the beginning of the year, Tennyson Auto Parts had an accounts receivable balance of $31,800 and a balance in the allowance for doubtful accounts of $2,980 (credit). During the year, Tennyson had credit sales of $624,300, collected accounts receivable in the amount of $602,700, wrote off $18,600 of accounts receivable, and had the following data for accounts receivable at the end of the period: Accounts Receivable Age Amount Proportion Expected to Default Current $22,400 0.01 1–15 days past due...

Subjects