PB8-1 Recording Accounts Receivable Transactions Using the Allowance Method [LO
ID: 2550173 • Letter: P
Question
PB8-1 Recording Accounts Receivable Transactions Using the Allowance Method [LO 8-2 Chipman software recently reported the following amounts in its unadjusted trial balance at its year-end Debits Credits $ 3,600 Accounts Receivable Allowance for Doubtful Accounts Sales (assume all on credit) $ 46 50,000 Required: 182. Prepare the adjusting journal entry required for the year. ( no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Round your answers to nearest whole dollar amount. (i) Assume Chipman uses 1/4 of 1 percent of sales to estimate its Bad Debt Expense for the year. (ii) Assume instead that Chipman uses the aging of accounts receivable method and estimates that $86 of its Accounts Receivable will be uncollectibleExplanation / Answer
1. as per percent of sale method, a certain percentage of credit sales will consider as baddebt expense
2.
Normal balance in allowance for doubtful accounts will credit balance. but here, opening balance in allowance for doubtful account showing a debit balance. so it should add with ending balance to claculate baddebt expense.
3.
Baddebt expenses ($50,000*0.25%) $ 125 Allowance for doubtful accounts $ 125 (To record baddebt expenses using percent credit sales method)Related Questions
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