The trial balance before adjustment of Carla Inc. shows the following balances.
ID: 2339153 • Letter: T
Question
The trial balance before adjustment of Carla Inc. shows the following balances. Dr. Cr. Accounts Receivable $95,500 Allowance for Doubtful Accounts 2,310 Sales Revenue (all on credit) $739,900 Give the entry for estimated bad debts assuming that the allowance is to provide for doubtful accounts on the basis of (a) 5% of gross accounts receivable and (b) 6% of gross accounts receivable and Allowance for Doubtful Accounts has a $1,858 credit balance. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Explanation / Answer
Answer;
1
Date
Journal Entries
Debit
Credit
(a)
Bad debt Expanses
7085
Allowance for Doubtful accounts
7085
Working notes for the above answer;
Allowance
=(5% of gross Account reliable) + (Debit balance Allowance for Doubtful account)
=(5% x95500) +2310
=7085
_____________________________________________________________________________
2
Date
Journal Entries
Debit
Credit
(a)
Bad debt Expanses
3872
Allowance for Doubtful accounts
3872
Working notes for the above answer;
=(6% of gross Account reliable) - (credit balance Allowance for Doubtful account)
=(6% x95500) -1858
=3872
Date
Journal Entries
Debit
Credit
(a)
Bad debt Expanses
7085
Allowance for Doubtful accounts
7085
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