a) The trial balance before adjustment of Jason Donohoe Company reports the following balances: Accounts receivable Allowance for doubtful accounts Sales (all on credit) Sales returns and allowances Dr. $300,000 80,000 Date Instructions (a) Prepare the entry for estimated bad debts assuming the balance sheet approach is used, and doubtful accounts are estimated to be 6% of gross accounts receivable. DR/CR Cr. (b) Prepare the entry for estimated bad debts assuming that income statement approach is used at 1% of net sales. $ 5,000 1,700,000 (c) Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $5,000 instead of a credit balance. How will this difference affect the journal entry in part (a)? Account Debit Credit

a) The trial balance before adjustment of Jason Donohoe Company reports the following balances: Accounts receivable Allowance for doubtful accounts Sales (all on credit) Sales returns and allowances Dr. $300,000 80,000 Date Instructions (a) Prepare the entry for estimated bad debts assuming the balance sheet approach is used, and doubtful accounts are estimated to be 6% of gross accounts receivable. DR/CR Cr. (b) Prepare the entry for estimated bad debts assuming that income statement approach is used at 1% of net sales. $ 5,000 1,700,000 (c) Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $5,000 instead of a credit balance. How will this difference affect the journal entry in part (a)? Account Debit Credit

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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