4. The records of Quest Company included the following accounts (with normal balances). Cash sales, current year $2,160,000 Credit sales, current year 1,620,000 Balance in accounts receivable, December 31 prior year Balance in accounts receivable, December 31 current year Balance in allowance for doubtful accounts, December 31 prior year (Cr.) Accounts written off as uncollectible during the current year The company estimates bad debts as 2% of receivables at year-end to be uncollectible. Prepare the adjusting entry at December 31 of the current year to adjust the allowance for doubtful accounts. Date Account Name Cr. Rad Debt F 324,000 Dr. 360,000 Dr. 5,400 Cr. 9,000 Dr.

4. The records of Quest Company included the following accounts (with normal balances). Cash sales, current year $2,160,000 Credit sales, current year 1,620,000 Balance in accounts receivable, December 31 prior year Balance in accounts receivable, December 31 current year Balance in allowance for doubtful accounts, December 31 prior year (Cr.) Accounts written off as uncollectible during the current year The company estimates bad debts as 2% of receivables at year-end to be uncollectible. Prepare the adjusting entry at December 31 of the current year to adjust the allowance for doubtful accounts. Date Account Name Cr. Rad Debt F 324,000 Dr. 360,000 Dr. 5,400 Cr. 9,000 Dr.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Bad Debts

At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.

Accounts Receivable

The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.

Question

4. The records of Quest Company included the following accounts (with normal balances).
Cash sales, current year
$2,160,000
Credit sales, current year
1,620,000
Balance in accounts receivable, December 31 prior year
Balance in accounts receivable, December 31 current year
Balance in allowance for doubtful accounts, December 31 prior year (Cr.)
Accounts written off as uncollectible during the current year
The company estimates bad debts as 2% of receivables at year-end to be uncollectible.
Prepare the adjusting entry at December 31 of the current year to adjust the allowance for doubtful accounts.
Date
Account Name
Cr.
Dec. 31 Bad Debt Expense
Allowance for Doubtful Accounts
◆
Dr.
324,000 Dr.
360,000 Dr.
5,400 Cr.
9,000
0 x
0✔
0
0 x

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