A trial balance before adjustments included the following: Debit Credit Sales 425,000 Sales returns and allowance 14,000 Accounts receivable 43,000 Allowance for doubtful accounts 760 a. If the estimate of uncollectibles is made by taking 2% of net sales, the amount of the adjustment is $ Answer 1 Question 5 b. If the estimate of uncollectibles is made by taking 10% of gross account receivables, the amount of the adjustment is $ Answer 2 Question 5
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.
A
Debit Credit
Sales 425,000
Sales returns and allowance 14,000
Allowance for doubtful accounts 760
a. If the estimate of uncollectibles is made by taking 2% of net sales, the amount of the adjustment is $ Answer 1 Question 5
b. If the estimate of uncollectibles is made by taking 10% of gross account receivables, the amount of the adjustment is $ Answer 2 Question 5
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