Exercise 8-5 The ledger of Swifty Corporation at the end of the current year sho

Question

Exercise 8-5 The ledger of Swifty Corporation at the end of the current year shows Accounts Receivable $105,000; Sales Revenue $837,000; and Sales Returns and Allowances $22,600. (a) If Swifty Corporation uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Swifty Corporation determines that L. Dole's (b) If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 15% of accounts (c) If Allowance for Doubtful Accounts has a debit balance of $196 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 10% of accounts $1,800 balance is uncollectible receivable. receivable (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit

Explanation / Answer

SOLUTION

S.No. Account titles and Explanation Debit ($) Credit ($) A. Bad Debt Expense 1,800 Accounts Receivable 1,800 B. Bad Debt Expense [($105,000*15%)-$2,100] 13,650   Allowance for Doubtful Accounts 13,650 C. Bad Debt Expense [($105,000*10%)+$196 10,696   Allowance for Doubtful Accounts 10,696

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