The trial balance before adjustment for ABC co. reports the following balances
Dr. Cr.
Accounts receivable $250,000
Allowance for doubtful accounts $500
Sales (all on credit) $1,180,000
Sales returns and allowance $150,000
Sales discount $30,000
Instructions: Prepare the entries for bad debt expense assuming the uncollectible amount be
1) 2% of gross account receivable and
2) 0.5% of net sales.
The trial balance before adjustment for ABC co. reports the following balances
Dr. Cr.
Accounts receivable $250,000
Allowance for doubtful accounts $500
Sales (all on credit) $1,180,000
Sales returns and allowance $150,000
Sales discount $30,000
Instructions: Prepare the entries for bad debt expense assuming the uncollectible amount be
1) 2% of gross account receivable and
2) 0.5% of net sales.
Related questions
The trial balance before adjustment of Risen Company reports the following balances:
| Dr. | Cr. | |||
| Accounts receivable | $300,000 | |||
| Allowance for doubtful accounts | $5,000 | |||
| Sales (all on credit) | 1,700,000 | |||
| Sales returns and allowances | 80,000 |
nstructions
(a) Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be 6% of gross accounts receivable.
(b) Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $5,000 instead of a credit balance. How will this difference affect the journal entries in part (a)?
(c) what is the theoretical justification for the percentage -of-recievables method used to estimate bad debts?
