7. value: 0.00 points The J.T. Traverse Company is well known for its Traverse p

Question

7. value: 0.00 points The J.T. Traverse Company is well known for its Traverse pens. The company recently reported the following amounts in its unadjusted trial balance as of December 31. Debits 27,191,000 Credits Accounts Receivable Allowance for Doubtful Accounts Sales Revenue $ 945,000 154,812,000 Required 1. & 2. Prepare the adjusting journal entry required at December 31 for recording Bad Debt Expense. (If no entry is required for a transactionlevent, select "No Journal Entry Required" in the first account field.) ) Assume Traverse uses 1/2 of 1 percent of sales to estimate its bad debt expense for the year. TIP: The percentage of credit sales method directly calculates Bad Debt Expense. (ii) Assume instead that Traverse uses the aging of accounts receivable method and estimates that $993,000 of Accounts Receivable will be uncollectible. TIP: The aging of accounts receivable method focuses on calculating what the adjusted Allowance for Doubtful Accounts balance should be. You need to consider the existing balance when determining the adjustment.

Explanation / Answer

1 31-Dec Bad debts expense 774060 =154812000*0.5%         Allowance for doubtful accounts 774060 2 31-Dec Bad debts expense 48000 =993000-945000         Allowance for doubtful accounts 48000 3 31-Dec Bad debts expense 1004750 =993000+11750         Allowance for doubtful accounts 1004750 4 Allowance for doubtful accounts 11000         Accounts Receivable 11000

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