Recording Accounts and Notes Receivable Transactions; Estimating Bad Debts Clayco Company completes the following transactions during the

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Recording Accounts and Notes Receivable Transactions; Estimating Bad Debts Clayco Company completes the following transactions during the year.

July 14 30 Nov. 1 3 Writes off a $750 account receivable arising from a sale to Briggs Company that dates to

recovery. Receives payment of principal plus interest from JT for the August 15 note. Dec. 13

Required
1. Prepare Clayco Company’s journal entries to record these transactions.
2. Prepare a year-end adjusting journal entry as of December 31 for each separate situation.

a. Bad debts are estimated to be $20,400 by aging accounts receivable. The unadjusted balance of the Allowance for Doubtful Accounts is a $1,000 debit.

b. Alternatively, assume that bad debts are estimated using the percent of sales method. The Allowance for Doubtful Accounts had a $1,000 debit balance before adjustment, and the company estimates bad debts to be 1% of its credit sales of $2,000,000.

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