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Uncollectible Accounts—Percentage of Sales and Percentage of Receivables At the end of the current year, the...

Uncollectible Accounts—Percentage of Sales and Percentage of Receivables

At the end of the current year, the accounts receivable account of Parker's Nursery Supplies has a debit balance of $344,120. Credit sales are $2,658,000. Record the end-of-period adjusting entry on December 31, in general journal form, for the estimated uncollectible accounts. Assume the following independent conditions existed prior to the adjustment:

1. Allowance for Doubtful Accounts has a credit balance of $1,985.

a. The percentage of sales method is used and bad debt expense is estimated to be 1% of credit sales. If an amount box does not require an entry, leave it blank.

Page: 1
DATE ACCOUNT TITLE DOC.
NO.		 POST.
REF.		 DEBIT CREDIT
1 20-- Dec. 31 1
2 2
3 3

b. The percentage of receivables method is used and an analysis of the accounts produces an estimate of $23,690 in uncollectible accounts. If an amount box does not require an entry, leave it blank.

Page: 1
DATE ACCOUNT TITLE DOC.
NO.		 POST.
REF.		 DEBIT CREDIT
1 20-- Dec. 31 1
2 2
3 3

2. Allowance for Doubtful Accounts has a debit balance of $1,160.

a. The percentage of sales method is used and bad debt expense is estimated to be ¾ of 1% of credit sales. If an amount box does not require an entry, leave it blank.

Page: 1
DATE ACCOUNT TITLE DOC.
NO.		 POST.
REF.		 DEBIT CREDIT
1 20-- Dec. 31 1
2 2
3 3

b. The percentage of receivables method is used and an analysis of the accounts produces an estimate of $22,330 in uncollectible accounts. If an amount box does not require an entry, leave it blank.

Page: 1
DATE ACCOUNT TITLE DOC.
NO.		 POST.
REF.		 DEBIT CREDIT
1 20-- Dec. 31 1
2 2
3 3

Solutions

Expert Solution

1. Allowance for Doubtful Accounts has a credit balance of $1,985. Workings :
a. The percentage of sales method is used and bad debt expense is estimated to be 1% of credit sales.
Date General Journal Doc No. post Ref. Debit Credit Bad debt expense 26580
20-Dec,31 Bad debt expense 24595 (2658000*1%)
To Allowance for doubtful accounts 24595 Credit balance -1985
(Being adjustment entry made for bad debt) Adjustment req 24595
b. The percentage of receivables method is used and an analysis of the accounts produces an estimate of $23,690 in uncollectible accounts.
Date General Journal Doc No. post Ref. Debit Credit Estimate of bad debt 23690
20-Dec,31 Bad debt expense 21705 credit balance -1985
To Allowance for doubtful accounts 21705
Adjustment req 21705
(Being adjustment entry made for bad debt)
2. Allowance for Doubtful Accounts has a debit balance of $1,160.
a. The percentage of sales method is used and bad debt expense is estimated to be ¾ of 1% of credit sales Bad debt expense 19935
(2658000*1%*3/4)
Date General Journal Doc No. post Ref. Debit Credit Debit balance 1160
20-Dec,31 Bad debt expense 21095
To Allowance for doubtful accounts 21095 Adjustment req 21095
(Being adjustment entry made for bad debt)
b. The percentage of receivables method is used and an analysis of the accounts produces an estimate of $22,330 in uncollectible accounts.
Date General Journal Doc No. post Ref. Debit Credit
20-Dec,31 Bad debt expense 23490 Estimate of bad debt 22330
To Allowance for doubtful accounts 23490 Debit balance 1160
(Being adjustment entry made for bad debt) Adjustment req 23490

ekkarill92 answered 1 year ago
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