Exercise 9-3 The ledger of Costello Company at the end of the current year shows

Question

Exercise 9-3 The ledger of Costello Company at the end of the current year shows Accounts Receivable $141,000, Sales Revenue $844,000, and Sales Returns and Alowances $26,000 If Costello uses the direct write-off method to account for uncolectible accounts, journalize the adjusting entry at December 31, assuming Costello determines that L. Dole's $2,300 balance is uncollecbble. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 LINK TO TEXT

Explanation / Answer

1 Dec-31 Bad debts expense 2300          Accounts receivable 2300 2 Dec-31 Bad debts expense 24540 =(844000-26000)*3%         Allowance for doubtful accounts 24540 Dec-31 Bad debts expense 11000 =(141000*10%)-3100         Allowance for doubtful accounts 11000 3 Dec-31 Bad debts expense 24540 =(844000-26000)*3%         Allowance for doubtful accounts 24540 Dec-31 Bad debts expense 8680 =(141000*6%)+220         Allowance for doubtful accounts 8680

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