Question
At the end of the current year, the balance of the accounts receivable account for Astro Masonry was $57,000. Credit sales for the year were
At the end of the current year, the balance of the accounts receivable account for Astro Masonry was $57,000. Credit sales for the year were $629,000.
Determine the amount of the adjusting entries for uncollectible accounts and the amount of the net receivables under each of the following assumptions.
1. The Allowance for Bad Debts has a credit balance of $840.
a. The percentage of sales method is used and it is estimated that bad debts expense will be 1.6% of credit sales.
b.The percentage of receivables method is used and based on an analysis of the accounts it is estimated that bad debts will amount to $3,700.
S.No. | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ||
---|---|---|---|---|---|---|
1 | a. | Bad Debt Expense | 1 | |||
2 | 2 | |||||
3 | b. | 3 | ||||
4 | 4 |
2. The Allowance for Bad Debts has a debit balance of $400.
a. The percentage of sales method is used and it is estimated that bad debts expense will be 1% of credit sales.
b. The percentage of receivables method is used and based on an analysis of the accounts it is estimated that bad debts will amount to $3,900.
S. No. | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ||
---|---|---|---|---|---|---|
1 | a. | 1 | ||||
2 | 2 | |||||
3 | b. | 3 | ||||
4 | 4 |
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