Pharoah Company reports the following financial information before adjustments. Dr. Cr. Accounts Receivable $130,100 Allowance for...

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Question

Pharoah Company reports the following financial information before adjustments.

Prepare the journal entry to record bad debt expense assuming Pharoah Company estimates bad debts at (a) 4% of accounts receivable and (b) 4% of accounts receivable but Allowance for Doubtful Accounts had a $1,490 debit balance. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

	Journal entries
(a)
Date	General Journal	DEBIT ($)	CREDIT ($)

	Bad Debt Expense	1,894.00
	Allowance for Bad Debts		1,894.00


(b)
Date	General Journal	DEBIT ($)	CREDIT ($)

	Bad Debt Expense	6,694.00
	Allowance for Bad Debts		6,694.00


	Explanation

(a)	3% of accounts receivable uncollectible = $130,100*4% = $5,204
	Credit balance of allowance for doubtful accounts = $3,310
	Hence, Bad Debt Expense = 5,204 - 3,310 = $1,894

(b)	3% of accounts receivable uncollectible = $130,100*4% = $5,204
	Debit balance of allowance for doubtful accounts = $1,490
	Hence, Bad Debt Expense = 5,204 + 1,490 = $6,694

ekkarill92 answered 2 years ago

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Accounts Receivable

Allowance for Doubtful Accounts

Sales Revenue (all on credit)

Sales Returns and Allowances