Question
Assume the following events for the year 2011. 1. Credit sales $600,000 2. Cash sales 300,000 3. Accounts receivable balance 1/1/11 50,000 4. Accounts written
Assume the following events for the year 2011.
1. Credit sales $600,000
2. Cash sales 300,000
3. Accounts receivable balance 1/1/11 50,000
4. Accounts written off during the year were 9,000
5. Allowance for Uncollectibles balance 1/1/11 2,000
6. Sixty percent (60%) of this year's credit sales are
collected during the year.
Required
Scenario One Use the above data set. Assume that the company estimates itsannual bad debt expense at 2% of total sales.
1.Compute the Bad Debt Expense and provide the journal entry to show its recognition
2.Provide the journal entry showing the write-off of bad debts.
3.Show the balance sheet presentation of net accounts receivable.
Scenario Two Use the above data set. Ignore Scenario One. Assume that the company estimates that 4% of its accounts receivable will
notget collected.
1.Compute the Bad Debt Expense and provide the journal entry to show its recognition.
2.Provide the journal entry showing the write-off of bad debts. 3.Show the balance sheet presentation of net accounts receivable.
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