#3

Presented The trial balance before adjustment of ABC Company reports the following balances at 12/31/2016, the company's fiscal year end:

Dr.Cr.

Accounts receivable$300,000

Allowance for doubtful accounts$5,000

Sales (all on credit)$1,700,000

Sales returns and allowances$80,000

Using the attached T-account template:

?Record the balances as indicated above. Label these unadjusted balances "B" for balance.

?After a careful analysis of the aged receivables:

?Management wrote off $22,000 of receivables considered to be uncollectible. Prepare the entry and label is "a"

?Management estimated bad debt expense assuming that the doubtful accounts are 6% of gross accounts receivable. Prepare the entry and label it "b"

Using the attached T-account:

a.Enter the accounts and balances.

b.Pre pare the entry for estimated bad debts assuming that doubtful accounts are estimated to be 6% of gross accounts receivable.

c.Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $5,000 instead of a credit balance.How will this difference affect the journal entry in part (a)?

d.What is the theoretical justification for the percentage-of-receivables method used to estimate bad debts?

#3 Presented The trial balance before adjustment of ABC Company reports the following balances at 12/31/2016, the company's fiscal year end: Accounts receivable Allowance for doubtful accounts Sales (all on credit) Sales returns and allowances Dr. $300,000 Cr. $5,000 $1,700,000 $80,000 Using the attached T-account template: Record the balances as indicated above. Label these unadjusted balances \"B\" for balance. After a careful analysis of the aged receivables: Management wrote off $22,000 of receivables considered to be uncollectible. Prepare the entry and label is \"a\" Management estimated bad debt expense assuming that the doubtful accounts are 6% of gross accounts receivable. Prepare the entry and label it \"b\" Using the attached T-account: a. Enter the accounts and balances. b. Prepare the entry for estimated bad debts assuming that doubtful accounts are estimated to be 6% of gross accounts receivable. c. Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $5,000 instead of a credit balance. How will this difference affect the journal entry in part (a)? d. What is the theoretical justification for the percentage-of-receivables method used to estimate bad debts? No. 3 = ASSETS LIABILITIES + EQUITY Non-current Assets Current Assets Property, Plant & Equipment Investments Intangible Assets/Other Current Liabilities Non-Current Liabilities Contributed Capital Earned Capital Accumulated OCI