Guttersnipe, Inc. has two divisions. a) Guttersnipe Plumbing Tools calculates it
ID: 2436036 • Letter: G
Question
Guttersnipe, Inc. has two divisions.a) Guttersnipe Plumbing Tools calculates its Allowance for Doubtful Accounts as a percentage of sales. Calculate the Plumbing Tools Division's adjustment to Allowance for Doubtful Accounts for the quarter as 1.75% of Sales. Sales for the quarter are $2,355,890. The beginning balance in Allowance for Doubtful Accounts was $4,661.80. Determine the ending balance.
b) The Guttersnipe Services division calculates its Allowance for Doubtful Accounts as a percentage of the balance in Accounts Receivable. The Services division allows for 2.125% of Accounts Receivable as potential bad debts. The current balance in Allowance for Doubtful Accounts is $1,667.50. The ending balance in A/R is $218,894.90. Determine the adjustment and ending balance in Allowance for Doubtful Accounts
c) In general journal format, write up the entries necessary for each transaction
Explanation / Answer
a)2,355,890 *.0175= 41,228.08 b)218,894.40 * .02125= 4,651.51 c) DR Bad debt expense 36,566.28 CR Allowance for doubtful accounts 36,566.28 DR Bad debt expense 2,984.01 CR Allowance for doubtful accounts 2,984.01
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