During the year ended December 31, 2015, Kelly\'s Camera Shop had sales revenue

Question

During the year ended December 31, 2015, Kelly's Camera Shop had sales revenue of $160,000, of which $80,000 was on credit. At the start of 2015, Accounts Receivable showed a $10,000 debit balance and the Allowance for Doubtful Accounts showed a $580 credit balance. Collections of accounts receivable during 2015 amounted to $66,000. Data during 2015 follow a. On December 10, a customer balance of $1,400 from a prior year was determined to be uncollectible, so it was written off. b. On December 31, a decision was made to continue the accounting policy of basing estimated bad debt losses on 2 percent of credit sales for the year. Required: 1. Give the required journal entries for the two events in December. (f no entry is required for a transactionlevent, select "No Journal Entry Required" in the first account field.)

Explanation / Answer

1a 10-Dec Allowance for Doubtful Accounts 1400           Accounts receivable 1400 31-Dec Bad debt expense 1600 =80000*2%         Allowance for Doubtful Accounts 1600 2 Current Assets: Accounts receivable 22600 Less: Allowance for Doubtful Accounts 780 Accounts receivable, net 21820 Operating expenses: Bad debt expense 1600 3 No, it is not reasonable

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