In: Accounting
E7.9B (L03) (Computing Bad Debts and Preparing Journal Entries) The trial balance before adjustment of Santillan Inc. shows the following balances: | |||||||||
DEBITS | CREDITS | ||||||||
Accounts Receivable | $180,000 | ||||||||
Allowance for Doubtful Accounts | $3,500 | ||||||||
Sales (all on account ) | $1,000,000 | ||||||||
Instructions | |||||||||
Give the entry for estimated bad debts assuming that the allowance is to provide for doubtful accounts on the basis of ( | |||||||||
a) 5% of accounts receivable and | |||||||||
(b) 5% of accounts receivable but Allowance for Doubtful Accounts had a $2,500 DEBIT balance. | |||||||||
(C) 1% of Sales , Allowance has a $3,500 credit balance | |||||||||
Accts Rec | Allowance For D/A | Sales | |||||||
180,000 | 3,500 | 1,000,000 | |||||||