Sheridan Co. uses the percentage of sales approach to record bad debt expense. I

Question

Sheridan Co. uses the percentage of sales approach to record bad debt expense. It estimates that 1.50% of net credit sales will become uncollectible. Credit sales are $817,000 for the year ended April 30, 2017; sales returns and allowances are $51,600; sales discounts are $17,200; accounts receivable are $266,600; and the allowance for doubtful accounts has a credit balance of $5,160.

Date

Account Titles and Explanation

Debit

Credit

Apr. 30

Sheridan Co. uses the percentage of sales approach to record bad debt expense. It estimates that 1.50% of net credit sales will become uncollectible. Credit sales are $817,000 for the year ended April 30, 2017; sales returns and allowances are $51,600; sales discounts are $17,200; accounts receivable are $266,600; and the allowance for doubtful accounts has a credit balance of $5,160.

Prepare the adjusting entry to record bad debt expense in 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Apr. 30

Explanation / Answer

Journal Entry Date Particulars Dr. Amt. Cr. Amt. 30-Apr Bad Debt Expenses                                        Dr.    6,063.00    To Allowance for Doubtful Accounts    6,063.00 (Record the Bad Debt Expenses) Amount Uncollectible = 1.50% X ($817,000 - $51,600 - $17,200) Amount Uncollectible = $11,223 Bad Debt Expenses = $11,223 - $5,160 = $6,063

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