At each calendar year-end, Mazie Supply Co. uses the percent of accounts receiva

Question

At each calendar year-end, Mazie Supply Co. uses the percent of accounts receivable method to estimate bad debts. On December 31, 2017, it has outstanding accounts receivable of $49,500, and it estimates that 5% will be uncollectible. Prepare the adjusting entry to record bad debts expense for year 2017 under the assumption that the Allowance for Doubtful Accounts has: (a) a $842 credit balance before the adjustment. (b) a $248 debit balance before the adjustment. View transaction list 1 Prepare the adjusting entry to record bad debts expense for year 2017 under the assumption that the Allowance for Doubtful Accounts has a $842 credit balance before the adjustment. pense ance efore 2 Prepare the adjusting entry to record bad debts expense for year 2017 under the assumption that the Allowance for Doubtful Accounts has a $248 debit balance before the adjustment. Credit Note :·journal entry has been entered Record entry Clear entry View general journal

Explanation / Answer

Answer: 1. When Allownces for doubtful debt has credit balance of $842

Working Note:

Receivable Balance as on 31 Dec 2017 = $49500

% of Bad Debt = 5%

Therefore Total Bad debt = 49500*5% = 2475

And Credit Balance of Allownces for doubtful Debt is 842

Journal Entries

Provision for doubtful A/c Dr. 842

Bad Debt A/c Dr. 2475

To Debtors A/c 3317

(Beind Bad debt recorded in the books)

Profit and Loss A/c dr. 2475

To Bad Debt A/c 2475

(Being bad write-off)

Answer: 2. When Allownces for Bad debt Debit Balance is 248

Bad Debt A/c Dr. 2475

To Allownces for Doubtful A/c 248

To Debtors A/c 2227

(Being Bad debt recorded in the books)

Profit and Loss A/c dr. 2475

To Bad Debt A/c 2475

(Being Bad Debt written-off)

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.