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How to do part C? Swiss Supplies showed the following selected adjusted balances at its December 31, 2019, year-end: Accounts Receivable Dec. 31/19 Balance 460,000
How to do part C?
Swiss Supplies showed the following selected adjusted balances at its December 31, 2019, year-end: Accounts Receivable Dec. 31/19 Balance 460,000 Allowance for Doubtful Accounts 17,600 Dec. 31/19 Balance During 2020, the following selected transactions occurred: a. Sales totalled $2,850,000, of which 25% were cash sales (cost of sales $1,837,000). b. Sales returns were $111,000, half regarding credit sales. The returned merchandise was scrapped. c. An account for $27,000 was recovered. d. Several accounts were written off: $29,000. e. Collections from credit customers totalled $1,810,000 (excluding the recovery in (c) above). Part A Required: 1. Journalize transactions (a) through (e). You may find it useful to post your entries to T-accounts for Accounts Receivable and Allowance for Doubtful Accounts. View transaction list View journal entry worksheet X No Transaction General Journal Debit Credit 1 a(1) Cash 712,500 2,137,500 Accounts receivable Sales 2,850,000 2 a(2) 1,837,000 Cost of goods sold Merchandise inventory 1,837,000 3 3 b Sales returns and allowances 111,000 Accounts receivable 55,500 55,500 Cash 4 c(1) Accounts receivable 27,000 Allowance for doubtful accounts 27,000 5 c(2) Cash 27,000 Accounts receivable 27,000 6 d 29,000 Allowance for doubtful accounts Accounts receivable 29,000 7 e Cash 1,810,000 Accounts receivable 1,810,000 Part B Required: 2. Prepare the December 31, 2020, adjusting entry to estimate bad debts assuming that uncollectible accounts are estimated to be 1% of net credit sales. View transaction list View journal entry worksheet No Date General Journal Debit Credit December 31 Bad debt expense 20,820 Allowance for doubtful accounts 20,820 3. Show how accounts receivable will appear on the December 31, 2020, balance sheet. Partial Balance Sheet Assets Current assets: $ 703,000 Accounts receivable Less: Allowance for doubtful accounts (36,420) $ 666,580 4. What will bad debt expense be on the income statement for the year ended December 31, 2020? Bad debt expense $ 20,820 Part C (independent of Part B) Required: 5. Prepare the December 31, 2020, adjusting entry to estimate bad debts assuming that uncollectible accounts are estimated to be 3% of outstanding receivables. View transaction list View journal entry worksheet No Date General Journal Debit Credit 1 Dec 31 Bad debt expense 7,030 Allowance for doubtful accounts 7,030Step by Step Solution
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