Question

In: Accounting

Clinton Company showed the following information at May 31, 2019 Account Debit credit Sales $20540 Account...

Clinton Company showed the following information at May 31, 2019

Account

Debit

credit

Sales

$20540

Account Receivable

$ 8000

Allowance for doubtful A/C

$260



Required:

1. Using the % of sales approach and assuming 3% of sales to estimate ADA

  1. Calculate the estimated bad debt

  2. Prepare the journal and T-accounts to adjust the ADA

  3. Show the net realizable value of the A/C Receivable on a balance sheet extract.

2. Using the % of Account Receivable and assuming 10%

   

  1. Calculate the estimated bad debt

  2. Prepare the T-accounts and journal to adjust the ADA

  3. Show the net realizable value of the A/C Receivable on a balance sheet extract.

Solutions

Expert Solution

1] Estimated bad debt = 20540*3% = $             616
JOURNAL ENTRY:
Bad debts expense $             616
Allowance for doubtful A/C $           616
ALLOWANCE FOR DOUBTFUL ACCOUNTS
$           260 Beg. Bal.
Bad debts expense $           616
$           876
$           876 End. Bal.
BALANCE SHEET
Assets
Current Assets:
Cash xxxxx
Accounts receiable $ 8,000
Less: Allowance doubtful A/C $             876
Accounts receivable [Net] $       7,124
2] Estimated bad debt = 8000*10% = $             800
JOURNAL ENTRY:
Bad debts expense [800-260] $             540
Allowance for doubtful A/C $           540
ALLOWANCE FOR DOUBTFUL ACCOUNTS
$           260 Beg. Bal.
Bad debts expense $           540
$           800
$           800 End. Bal.
BALANCE SHEET
Assets
Current Assets:
Cash xxxxx
Accounts receiable $ 8,000
Less: Allowance for doubtful A/C $             800
Accounts receivable [Net] $       7,200

ekkarill92 answered 1 year ago
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