Problem 2: Accounting for Bad Debts: The following is selected account information and activity for the year ended 12/31/19: Beginning Account Balances 1/1/19 Accounts Receivable $60,000 1/1/19 Allowance for Doubtful Accounts $2,000 2019 Activity Sales on account - $800,000 Cash collections of $740,000 net of $12,000 in sales discounts Sales returns totaled $30,000 Sales allowances totaled $10,000 Accounts receivable written-off as uncollectible totaled $2,800 Required - Use the information above to calculate bad debts expense under the two following mutually exclusive and independent assumptions: A review of 12/31/19 subsidiary accounts receivable indicated that $3,000 was estimated to be uncollectible. b. Bad debts are estimated to run at 0.5% of sales based on historical data adjusted for current credit granting and collection procedures. For each of the above (a., b.) mutually exclusive and independent assumptions: Prepare the appropriate adjusting journal entry. Indicate the financial statement presentation: Net Accounts Receivable for the year-ended 12/31/19. 2019 Bad Debts Expense
Problem 2: Accounting for Bad Debts: The following is selected account information and activity for the year ended 12/31/19: Beginning Account Balances 1/1/19 Accounts Receivable $60,000 1/1/19 Allowance for Doubtful Accounts $2,000 2019 Activity Sales on account - $800,000 Cash collections of $740,000 net of $12,000 in sales discounts Sales returns totaled $30,000 Sales allowances totaled $10,000 Accounts receivable written-off as uncollectible totaled $2,800 Required - Use the information above to calculate bad debts expense under the two following mutually exclusive and independent assumptions: A review of 12/31/19 subsidiary accounts receivable indicated that $3,000 was estimated to be uncollectible. b. Bad debts are estimated to run at 0.5% of sales based on historical data adjusted for current credit granting and collection procedures. For each of the above (a., b.) mutually exclusive and independent assumptions: Prepare the appropriate adjusting journal entry. Indicate the financial statement presentation: Net Accounts Receivable for the year-ended 12/31/19. 2019 Bad Debts Expense
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter5: Sales And Receivables
Section: Chapter Questions
Problem 85APSA: Determining Bad Debt Expense Using the Aging Method At the beginning of the year, Tennyson Auto...
Related questions
Question
100%
Hello, would you be willing to assist me with solving this problem?
I am curious as to how you do the math to get 800 on the allowance for doubtful accounts as well. The
![Problem 2: Accounting for Bad Debts:
The following is selected account information and activity for the year ended 12/31/19:
Beginning Account Balances
1/1/19 Accounts Receivable $60,000
1/1/19 Allowance for Doubtful Accounts $2,000
2019 Activity
Sales on account - $800,000
Cash collections of $740,000 net of $12,000 in sales discounts
Sales returns totaled $30,000
Sales allowances totaled $10,000
Accounts receivable written-off as uncollectible totaled $2,800
Required - Use the information above to calculate bad debts expense under the two following
mutually exclusive and independent assumptions:
A review of 12/31/19 subsidiary accounts receivable indicated that $3,000 was estimated to be
uncollectible.
b. Bad debts are estimated to run at 0.5% of sales based on historical data adjusted for current credit
granting and collection procedures.
For each of the above (a., b.) mutually exclusive and independent assumptions:
Prepare the appropriate adjusting journal entry.
Indicate the financial statement presentation:
Net Accounts Receivable for the year-ended 12/31/19.
2019 Bad Debts Expense](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F45f3e0a4-3f21-4962-8ad5-de454383f96a%2F829a2470-6464-46f3-abda-a843ba71ccc9%2Fepeq7ho_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 2: Accounting for Bad Debts:
The following is selected account information and activity for the year ended 12/31/19:
Beginning Account Balances
1/1/19 Accounts Receivable $60,000
1/1/19 Allowance for Doubtful Accounts $2,000
2019 Activity
Sales on account - $800,000
Cash collections of $740,000 net of $12,000 in sales discounts
Sales returns totaled $30,000
Sales allowances totaled $10,000
Accounts receivable written-off as uncollectible totaled $2,800
Required - Use the information above to calculate bad debts expense under the two following
mutually exclusive and independent assumptions:
A review of 12/31/19 subsidiary accounts receivable indicated that $3,000 was estimated to be
uncollectible.
b. Bad debts are estimated to run at 0.5% of sales based on historical data adjusted for current credit
granting and collection procedures.
For each of the above (a., b.) mutually exclusive and independent assumptions:
Prepare the appropriate adjusting journal entry.
Indicate the financial statement presentation:
Net Accounts Receivable for the year-ended 12/31/19.
2019 Bad Debts Expense
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Cornerstones of Financial Accounting](https://www.bartleby.com/isbn_cover_images/9781337690881/9781337690881_smallCoverImage.gif)
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
![Intermediate Accounting: Reporting And Analysis](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
![Cornerstones of Financial Accounting](https://www.bartleby.com/isbn_cover_images/9781337690881/9781337690881_smallCoverImage.gif)
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
![Intermediate Accounting: Reporting And Analysis](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
![Financial Accounting: The Impact on Decision Make…](https://www.bartleby.com/isbn_cover_images/9781305654174/9781305654174_smallCoverImage.gif)
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College