Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The A.T. Cross Company is well known for its Cross pens. The company recently reported the following amounts in its unadjusted trial balance as of

The A.T. Cross Company is well known for its Cross pens. The company recently reported the following amounts in its unadjusted trial balance as of December 31.

Debits Credits
Accounts Receivable $ 30,691,000
Allowance for Doubtful Accounts $ 952,000
Sales Revenue 158,312,000

Required:
1. & 2.

Prepare the adjusting journal entry required at December 31 for recording Bad Debt Expense. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

(i) Assume Cross uses of 1 percent of sales to estimate its bad debt expense for the year.
TIP: The percentage of credit sales method directly calculates Bad Debt Expense.

(ii) Assume instead that Cross uses the aging of accounts receivable method and estimates that $1,007,000 of Accounts Receivable will be uncollectible.

TIP: The aging of accounts receivable method focuses on calculating what the adjusted Allowance for Doubtful Accounts balance should be. You need to consider the existing balance when determining the adjustment.

(1)Record the entry for bad debt expenses under the percentage of credit sales method

(2)Record the entry for bad debt expenses under the aging of accounts receivable method.

(3)Assume instead that Cross uses the aging of accounts receivable method and estimates that $1,007,000 of Accounts Receivable will be uncollectible and unadjusted balance in Crosss Allowance for Doubtful Accounts at December 31 was a debit balance of $10,050. Prepare the adjusting journal entry required at December 31 for recording bad debt expense. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

(3)Record the adjusting entry for bad debts as of december 31, using the aging of accounts receivable method

(4)If one of Crosss main customers declared bankruptcy, what journal entry would be used to write off its $10,000 balance? (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

(4) Record the write-off of a $10,000 customer account, which is not collectible due to bankruptcy.

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

Accounting Information Systems

Authors: Patrick R. Wheeler, Ulric J. Gelinas, Richard B. Dull, Dull Gelinas Wheeler

International 10th Edition

017035539X, 9780170355391

More Books

Students also viewed these Accounting questions

Question

Tell me what you know about our organization and the position.

Answered: 1 week ago