Question
A company had $3,200,000 in credit sales in year 2. At the end of the year (but before any adjusted journal entries), they had the
A company had $3,200,000 in credit sales in year 2. At the end of the year (but before any adjusted journal entries), they had the following account balances:
Accounts Receivable (0-30 days) $105,000
(31-60 days) 65,000
(Over 60 days) 20,000
Total Account Receivable 190,000
Allowance for Doubtful Accounts (credit balance) 11,000
Answer the following independent questions.
- If the company used the percentage of sales method to account for uncollectible accounts and they believed that 1.5 percent of sales will ultimately become uncollectible, prepare an adjusting journal entry to recognize bad debt expense year 2.
Debit Account ___________________________ Amount ____________
Credit Account ____________________________ Amount ____________
If a customer informed the company that it would not pay $14,000 that it owed, prepare the journal entry to write off the uncollectible account.
Debit Account ____________________________ Amount ____________
Credit Account _____________________________ Amount ____________
- If the company used the percentage of accounts receivable method to account for uncollectible accounts and believed that 1 percent of 0-30 day, 5 percent of 31-60 day, and 45 percent of over 60 day receivables would eventually prove uncollectible, prepare the adjusting journal entry to recognize bad debts for year 2.
Debit Account ___________________________ Amount ____________
Credit Account ____________________________ Amount ____________
If a customer informed the company that it would not pay $14,000 that it owed, prepare the journal entry to write off the uncollectible account.
Debit Account ___________________________ Amount ____________
Credit Account ____________________________ Amount ____________
- Prepare the first journal entry for part b. above if the balance in the Allowance for Doubtful Accounts were $15,000 instead of $11,000.
Debit Account ___________________________ Amount ____________
Credit Account ____________________________ Amount ____________
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