Brief Exercise 8-7 Kingston Co. uses the percentage-of-receivables basis to reco
ID: 2515295 • Letter: B
Question
Brief Exercise 8-7
Kingston Co. uses the percentage-of-receivables basis to record bad debt expense. It estimates that 3% of accounts receivable will become uncollectible. Accounts receivable are $503,000 at the end of the year, and the allowance for doubtful accounts has a credit balance of $1,910.
Prepare the adjusting journal entry to record bad debt expense for the year. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
list of accounts:
Accounts Payable
Accounts Receivable
Allowance for Doubtful Accounts
Bad Debt Expense
Buildings
Cash
Cost of Goods Sold
Income Summary
Interest Receivable
Interest Revenue
Inventory
Land
Maintenance and Repairs Expense
Notes Payable
Notes Receivable
Other Operating Expenses
Prepaid Insurance
Sales Discounts
Sales Returns and Allowances
Sales Revenue
Service Charge Expense
Supplies
Supplies Expense
If the allowance for doubtful accounts had a debit balance of $960 instead of a credit balance of $1,910, determine the amount to be reported for bad debt expense.
Brief Exercise 8-7
Kingston Co. uses the percentage-of-receivables basis to record bad debt expense. It estimates that 3% of accounts receivable will become uncollectible. Accounts receivable are $503,000 at the end of the year, and the allowance for doubtful accounts has a credit balance of $1,910.
Explanation / Answer
Bad Debts Expense ($503,000*3%) Dr $15,090
To Allowance for Doubtful Accounts Cr $15,090
( Being Bad Debts Expenses Booked)
Allowance for Doubtful Accounts ($15,090+$1910) Dr $17,000
To Accounts Receivable Cr $17,000
(Being Allowance for Doubtful Accounts adjusted)
If Allowance for Doubtful Accounts had debit balance of $960 instead of credit balance of $1,910 then amount to be reported for bad debts expenses are same as $ 15,090 as it not affect the Bad Debt Expenses it only affect Accounts Receivable. In that case Accounts Receivable are creditd with $14,130 instead of $17,000.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.