At December 31, 19X5, Knox Builders has an accounts receivable balance of ($ 137,000). Sales revenue for
Question:
At December 31, 19X5, Knox Builders has an accounts receivable balance of \(\$ 137,000\). Sales revenue for \(19 \times 5\) is \(\$ 950,000\), including credit sales of \(\$ 600,000\). For each of the following situations, prepare the year-end adjusting entry to record doubtful-account expense. Show how the accounts receivable and the allowance for doubtful accounts are reported on the balance sheet.
a. Allowance for Doubtful Accounts has a credit balance before adjustment of \(\$ 1,600\). Knox Builders estimates that doubtful-account expense for the year is \(1 / 2\) of 1 percent of credit sales.
b. Allowance for Doubfful Accounts has a debit balance before adjustment of \(\$ 1,700\). Knox Builders estimates that \(\$ 4,600\) of the accounts receivable will prove uncollectible.
Step by Step Answer:
Financial Accounting
ISBN: 9780133118209
2nd Edition
Authors: Charles T. Horngren, Jr. Harrison, Walter T.