Uncollectible Accounts—Percentage of Sales and Percentage of Receivables At the
ID: 2537566 • Letter: U
Question
Uncollectible Accounts—Percentage of Sales and Percentage of Receivables
At the end of the current year, the accounts receivable account of Parker's Nursery Supplies has a debit balance of $350,455. Credit sales are $2,616,000. Record the end-of-period adjusting entry on December 31, in general journal form, for the estimated uncollectible accounts. Assume the following independent conditions existed prior to the adjustment:
1. Allowance for Doubtful Accounts has a credit balance of $1,855.
a. The percentage of sales method is used and bad debt expense is estimated to be 1% of credit sales. If an amount box does not require an entry, leave it blank.
b. The percentage of receivables method is used and an analysis of the accounts produces an estimate of $23,035 in uncollectible accounts. If an amount box does not require an entry, leave it blank.
2. Allowance for Doubtful Accounts has a debit balance of $1,240.
a. The percentage of sales method is used and bad debt expense is estimated to be ¾ of 1% of credit sales. If an amount box does not require an entry, leave it blank.
b. The percentage of receivables method is used and an analysis of the accounts produces an estimate of $22,455 in uncollectible accounts. If an amount box does not require an entry, leave it blank.
Page: 1 DATE ACCOUNT TITLE DOC.NO. POST.
REF. DEBIT CREDIT 1 20-- Dec. 31 1 2 2 3 3
Explanation / Answer
1a 20-- Dec. 31 Bad debt expense 26160 =2616000*1% Allowance for Doubtful Accounts 26160 b 20-- Dec. 31 Bad debt expense 21180 =23035-1855 Allowance for Doubtful Accounts 21180 2a 20-- Dec. 31 Bad debt expense 19620 =2616000*0.75% Allowance for Doubtful Accounts 19620 b 20-- Dec. 31 Bad debt expense 23695 =22455+1240 Allowance for Doubtful Accounts 23695
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