Exercise 8-4 The ledger of Blossom Company at the end of the current year shows

Question

Exercise 8-4

The ledger of Blossom Company at the end of the current year shows Accounts Receivable $72,400; Credit Sales $784,350; and Sales Returns and Allowances $36,080.

If Allowance for Doubtful Accounts has a debit balance of $450 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 7% of accounts receivable.

(a) If Blossom Company uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Blossom Company determines that Matisse’s $810 balance is uncollectible. (b) If Allowance for Doubtful Accounts has a credit balance of $1,157 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 10% of accounts receivable. (c)

If Allowance for Doubtful Accounts has a debit balance of $450 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 7% of accounts receivable.

How would this be journalied? thanks

Explanation / Answer

a Bad debts expense 810         Accounts Receivable 810 b Bad debts expense 6083 =(72400*10%)-1157         Allowance for Doubtful Accounts 6083 c Bad debts expense 5518 =(72400*7%)+450         Allowance for Doubtful Accounts 5518

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