Question
In: Accounting
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.
| 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.
| 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.
| 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.
| 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 | ||||||||||
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