The December 31. 2013 balance sheet of Sauder Company had Accounts Receivable of
ID: 2490978 • Letter: T
Question
The December 31. 2013 balance sheet of Sauder Company had Accounts Receivable of $500,000 and a credit balance in Allowance for Doubtful Accounts of $33,000. During 2014, the following transactions occurred: sales on account $1,400,000; sales returns and allowances, $50,000; collections from customers, $1,150,000; accounts written off $35,000; previously written off accounts of $5,000 were collected. Journalize the 2014 transactions. If the company uses the percentage of sales basis to estimate bad debts expense and anticipates 2% of net sales for the year 2014 to be uncollectible, what is the adjusting entry at December 31, 2014?Explanation / Answer
Accounts
Debit
Credit
Account receivable
1,400,000
To Sales
1,400,000
Sales return and allowances
50,000
To Account receivable
50,000
Cash
1,150,000
To Account receivable
1,150,000
Allowance for doubtful debts
35,000
To Account receivable
35,000
Account receivable
5,000
To Allowance for doubtful debts
5,000
Cash
5,000
To account receivable
5,000
Net sales = 1,400,000 – 50,000
=$1,350,000
Estimated bad debts = 1,350,000 @2% = $27,000
Bad debts expense
27,000
To allowance for doubtful debts
27,000
- Journal Transactions
Accounts
Debit
Credit
Account receivable
1,400,000
To Sales
1,400,000
Sales return and allowances
50,000
To Account receivable
50,000
Cash
1,150,000
To Account receivable
1,150,000
Allowance for doubtful debts
35,000
To Account receivable
35,000
Account receivable
5,000
To Allowance for doubtful debts
5,000
Cash
5,000
To account receivable
5,000
- Estimated bad debts = 2% of net sales
Net sales = 1,400,000 – 50,000
=$1,350,000
Estimated bad debts = 1,350,000 @2% = $27,000
Bad debts expense
27,000
To allowance for doubtful debts
27,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.