Question
Kandel Company had the following data available for 2017 (before making any adjustments): Accounts receivable, 12/31/17 $320,900 Allowance for doubtful accounts 2,600 Net credit sales,
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Kandel Company had the following data available for 2017 (before making any adjustments):
Accounts receivable, 12/31/17 $320,900 Allowance for doubtful accounts 2,600 Net credit sales, 2017 861,000 Required:
1. Identify and analyze the adjustment to recognize bad debts under the following assumptions: (a) bad debts expense is expected to be 2% of net credit sales for the year.
Activity operating/ financing/ investing Accounts Allowance for Doubtful Accounts Increase/ decrease, Bad Debts Expense Increase/ decrease Statement(s) Balance Sheet and Income Statement/ balance statement only/ income statement only How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.
Balance Sheet Income Statement Stockholders' Net Assets = Liabilities + Equity Revenues Expenses = Income fill in the blank fill in the blank fill in the blank fill in the blank fill in the blank fill in the blank (b) Kandel expects it will not be able to collect 6% of the balance in accounts receivable at year-end.
Activity Accounts Statement(s) How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.
Balance Sheet Income Statement Stockholders' Net Assets = Liabilities + Equity Revenues Expenses = Income fill in the blank fill in the blank fill in the blank fill in the blank fill in the blank fill in the blank ec775c05307afba_10 2. Assume instead that the balance in the allowance account is a negative $2,600. How will this affect your answers to part (1)?
(a) bad debts expense is expected to be 2% of net credit sales for the year.
Activity Accounts Statement(s) How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.
Balance Sheet Income Statement Stockholders' Net Assets = Liabilities + Equity Revenues Expenses = Income fill in the blank fill in the blank fill in the blank fill in the blank fill in the blank fill in the blank (b) Kandel expects it will not be able to collect 6% of the balance in accounts receivable at year-end.
Activity Accounts Statement(s) How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.
Balance Sheet Income Statement Stockholders' Net Assets = Liabilities + Equity Revenues Expenses = Income fill in the blank fill in the blank fill in the blank fill in the blank fill in the blank fill in the blank
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Survey of Accounting
Authors: Carl S Warren
5th Edition
9780538489737, 538749091, 538489731, 978-0538749091
