Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

During the year ended December 31, 2021, Kelly's Camera Shop had sales revenue of $155,000, of which $77,500 was on credit. At the start

image text in transcribedimage text in transcribed

During the year ended December 31, 2021, Kelly's Camera Shop had sales revenue of $155,000, of which $77,500 was on credit. At the start of 2021, Accounts Receivable showed a $11,000 debit balance and the Allowance for Doubtful Accounts showed a $570 credit balance. Collections of accounts receivable during 2021 amounted to $65,000. Data during 2021 follow: a. On December 10, a customer balance of $1,350 from a prior year was determined to be uncollectible, so it was written off. b. On December 31, a decision was made to continue the accounting policy of basing estimated bad debt losses on 2 percent of credit sales for the year. Required: 1. Give the required journal entries for the two events in December. 2-a. Show how the amounts related to Bad Debt Expense would be reported on the income statement. 2-b. Show how the amounts related to Accounts Receivable would be reported on the balance sheet. 3. On the basis of the data available, does the 2 percent rate appear to be reasonable?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Financial Accounting

Authors: Fred Phillips, Robert Libby, Patricia Libby

4th edition

978-0073369709, 73369705, 78025370, 978-0077444846, 77444841, 978-0078025372

More Books

Students also viewed these Accounting questions