Question
Providing for Doubtful Accounts At the end of the current year, theaccounts receivableaccount has a debit balance of $888,000 and sales for the year total
Providing for Doubtful Accounts
At the end of the current year, theaccounts receivableaccount has a debit balance of $888,000 and sales for the year total $10,070,000.
- The allowance account before adjustment has a credit balance of $12,000.Bad debt expenseis estimated at 1/4 of 1% of sales.
- The allowance account before adjustment has a credit balance of $12,000. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $38,400.
- The allowance account before adjustment has a debit balance of $5,500. Bad debt expense is estimated at 3/4 of 1% of sales.
- The allowance account before adjustment has a debit balance of $5,500. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $45,700.
Determine the amount of the adjusting entry to provide for doubtful accounts under each of the assumptions (a through d) listed above.
a.$
b.$
c.$
d.$
1.Effect of Doubtful Accounts on Net Income
During its first year of operations, Mack's Plumbing Supply Co. had sales of $580,000, wrote off $9,300 of accounts as uncollectible using thedirect write-off method, and reported net income of $63,800. Determine what the net income would have been if theallowance methodhad been used, and the company estimated that 1 3/4% of sales would be uncollectible.
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