Question

Pool Corporation, Inc., is the world’s largest wholesale distributor of swimming pool supplies and equipment. Pool Corp. reported the following information related to bad debt estimates and write-offs for a recent year.

Allowance for doubtful accounts:

Balance at beginning of year $ 9,002

Bad debt expense 4,098

Write-offs (5,110 )

Balance at end of year $ 7,990

Required:

1. Prepare journal entries for the bad debt expense adjustment and total write-offs of bad debts for the current year.

2. Pool Corp. reduces net sales by the amount of sales returns and allowances, cash discounts, and credit card fees. Bad debt expense is recorded as part of selling and administrative expense. Assume that gross sales revenue for the month was $146,756, bad debt expense was $336, sales discounts were $1,704, sales returns were $1,236, and credit card fees were $2,609. What amount would Pool Corp. report for net sales for the month?

Pool Corp. reduces net sales by the amount of sales returns and allowances, cash discounts, and credit card fees. Bad debt expense is recorded as part of selling and administrative expense. Assume that gross sales revenue for the month was $143,256, bad debt expense was $266, sales discounts were $1,494, sales returns were $1,096, and credit card fees were $2,329.

What amount would Pool Corp. report for net sales for the month?

Answer 1

1	Date	Account titles and explanation					Debit	Credit
	XXX	Bad debt expense					4098
		Allowance for doubtful accounts						4098
		(Bad debt expense adjustment recorded)
	XXX	Allowance for doubtful accounts					5110
		Accounts receivable						5110
		(Write-offs recorded)
2	Net sales:
					$	$
	Gross sales					146756
	Less:
	Sales returns				1236
	Sales discounts				1704
	Credit card fees				2609	5549
	Net sales					141207
					$	$
	Gross sales					143256
	Less:
	Sales returns				1096
	Sales discounts				1494
	Credit card fees				2329	4919
	Net sales					138337
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