Question
DUE ASAP POINTS IMMEDIATLY
The ledger of Montgomery Company at the end of the current year shows Accounts Receivable $80,000; Credit Sales $817,000; and Sales Returns and Allowances $49,900. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) If Montgomery uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Montgomery determines that Baruth's $810 balance is uncollectible. If Allowance for Doubtful Accounts has a credit balance of $1,000 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 12% of accounts receivable. If Allowance for Doubtful Accounts has a debit balance of $950 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 10% of accounts receivable.
Explanation / Answer
Hi,
Please find the detailed answer as follows:
Part A:
Bad Debt Expense Dr. 810
Accounts Receivables - Baruth's Account Cr. 810
Part B:
Bad Debt Expense (817000 - 49900)*1% Dr. 7671
Allowance for Doubtful Debts Cr. 7671
Part C:
Bad Debt Expense (80000*10% + 950)*1% Dr. 8950
Allowance for Doubtful Debts Cr. 8950
Thanks.
