During Year 1, Nana Department Store had total sales of $3,000,000, of which 80% were on credit.
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Question:
During Year 1, Nana Department Store had total sales of $3,000,000, of which 80% were on credit. The beginning balance in Accounts Receivable (on January 1 of Year 1) was $165,000. The beginning balance in the Allowance for Doubtful Accounts (on January 1 of Year 1) was $20,000. The amount of accounts written off as uncollectible during the year was $27,000. The following aging of Accounts Receivable is for Nana Company at the end of Year 1. Aging of Accounts Receivable December 31 of Year 1 Less than 31 days to 61 days to Over Overall 30 days 60 days 90 days 90 days Total $492,000 $366,000 $72,000 $24,000 $30,000 Nana Company has developed the following bad debt information from its own past experience. Percent Ultimately Age of Account Uncollectible Less than 30 days 2 31 to 60 days 12 61 to 90 days 35 Over 90 days 90 Nana Company uses the aging method to determine its ending Allowance for Doubtful Accounts balance. Which ONE of the following is included in the journal entry necessary at the end of the year to record bad debt expense for the year DEBIT to Accounts Receivable for $51,360 CREDIT to Accounts Receivable for $58,360 DEBIT to Allowance for Doubtful Accounts for $51,360 CREDIT to Allowance for Doubtful Accounts for $58,360 CREDIT to Bad Debt Expense for $58,360 DEBIT to Bad Debt Expense for $51,360
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