On January 1, ABC Company had $190,000 in Accounts Receivable and during the month had Credit...

On January 1, ABC Company had $190,000 in Accounts Receivable and during the month had Credit sales of $370,000 and Cash sales of $200,000. During January, ABC collected $310,000 on account and wrote off a $12,000 receivable. Also, during January, ABC had Sales Allowances of $9,000; Sales Discounts of $16,000; and Sales Returns of $17,500. ABC managed to collect $3,800 of a previously written off account during January. The balance in the Allowance for Uncollectible Accounts on January 1 was $15,800.

I am not sure if my base for the problem is correct, I would appreciate some help.

Assuming that ABC estimates Bad Debt as 5% of accounts receivable, what is the adjusting entry for bad debt expense?

Acct Rec		Allow for Uncollect Accts
Beg. 190,000			Beg 15,800
310000	12,000
3800


End 491800

Ending Balance In Accounts Receivable	491800
x % of Receivables Estimated to be Uncollectible	5%
= Desired Bal in Allow for Uncollectible Accts	24590
+ Current Debit Bal in Allowance OR - Current Credit Bal in Allowance	-15800
= $ Amt in Adjusting Journal Entry	8790

Date	Accounts	Debit	Credit
	Bad debt exp
	Allow uncoll

Assuming that ABC estimates Bad Debt as 4% of Credit Sales, what is the adjusting entry for bad debt expense?

Credit Sales	370,000
x % of Sales Estimated to be Uncollectible	0.04
= $ Amt in Adjusting Journal Entry	14800

Date	Accounts	Debit	Credit
	Bad debt exp
	Allow uncoll

Solutions

Expert Solution

Note: Assuming Sales Allowances and Sales Returns are related to Accounts Receivable

ekkarill92 answered 1 year ago

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