Eaton Company\'s ledger at the end of the current year shows Accounts Receivable
ID: 2464640 • Letter: E
Question
Eaton Company's ledger at the end of the current year shows Accounts Receivable of $150,000.
Instructions
a. If Allowance for Doubtful Accounts has a credit balance of $4,400 in the trial balance and bad debts are expected to be 10% of accounts receivable, journalize the adjusting entry for the end of the period.
b. If Allowance for Doubtful Accounts has a debit balance of $4,400 in the trial balance and bad debts are expected to be 10% of accounts receivable, journalize the adjusting entry for the end of the period.
Explanation / Answer
a.
Adjusting Journal entry
Accounts/ Explanations
Debit
Credit
Bad Debts Expense
$10,600
Allowance for Doubtful Accounts
$10,600
(Being adjustment entry passed for bad debts)
Workings:
Estimated Bad Debts (150000*10%)
$15,000
Less: Credit Balance of Allowance for Doubtful Accounts
$ (4,400)
Adjustment Amount
$10,600
b.
Adjusting Journal entry
Accounts/ Explanations
Debit
Credit
Bad Debts Expense
$19,400
Allowance for Doubtful Accounts
$19,400
(Being adjustment entry passed for bad debts)
Workings:
Estimated Bad Debts (150000*10%)
$15,000
Add: Debit Balance of Allowance for Doubtful Accounts
$ 4,400
Adjustment Amount
$19,400
a.
Adjusting Journal entry
Accounts/ Explanations
Debit
Credit
Bad Debts Expense
$10,600
Allowance for Doubtful Accounts
$10,600
(Being adjustment entry passed for bad debts)
Workings:
Estimated Bad Debts (150000*10%)
$15,000
Less: Credit Balance of Allowance for Doubtful Accounts
$ (4,400)
Adjustment Amount
$10,600
b.
Adjusting Journal entry
Accounts/ Explanations
Debit
Credit
Bad Debts Expense
$19,400
Allowance for Doubtful Accounts
$19,400
(Being adjustment entry passed for bad debts)
Workings:
Estimated Bad Debts (150000*10%)
$15,000
Add: Debit Balance of Allowance for Doubtful Accounts
$ 4,400
Adjustment Amount
$19,400
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.