Question
3. Flowers Solutions has a $210,000 balance in Accounts Receivable on December 31, 2008. The Allowance for Doubtful Accounts has a $700 credit balance. Credit
3. Flowers Solutions has a $210,000 balance in Accounts Receivable on December 31, 2008. The Allowance for Doubtful Accounts has a $700 credit balance. Credit sales totaled $650,000 for the year.
a. If Flowers Solutions uses the percent of sales method and estimates that 1.5% of sales may be uncollectible, what is the bad-debt expense for 2008?
b. What is the ending balance in the Allowance for Doubtful Accounts after adjustments?
c. Would your answer be different if the Allowance for Doubtful Accounts had a $700 debit balance?
4. Assume the same account balances in question 3 for Flowers Solutions:
a. If Flowers Solutions uses the aging-of-accounts receivable method and has determined that $11,000 of Accounts Receivable are uncollectible, what is the bad-debt expense for 2005?
b. What is the ending balance in the Allowance for Doubtful Accounts after adjustments?
c. Would your answers be different if the Allowance for Doubtful Accounts had a $700 debit balance?
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