any reportS Cash Sales Credit Sales BD525,500 BD620,500 In addition, its unadjusted trial balance includes the following balances. Accounts receivable Allowance for doubtful accounts BD237,500 debit BD2,800 credit An aging analysis estimates that 4% of the year-end accounts receivable are uncollectable. Required: A. Prepare the adjusting entry needed for Mars Company to recognize bad debts on December 31, 2019 B. Prepare an extract from the statement of financial position as at December 31, 2019 showing the effect of the preceding transaction. C. Using illustrative examples, briefly discuss whether Mars Company should consider adopting the direct write-off method of accounting for bad debts rather than the allowance method currently used.
any reportS Cash Sales Credit Sales BD525,500 BD620,500 In addition, its unadjusted trial balance includes the following balances. Accounts receivable Allowance for doubtful accounts BD237,500 debit BD2,800 credit An aging analysis estimates that 4% of the year-end accounts receivable are uncollectable. Required: A. Prepare the adjusting entry needed for Mars Company to recognize bad debts on December 31, 2019 B. Prepare an extract from the statement of financial position as at December 31, 2019 showing the effect of the preceding transaction. C. Using illustrative examples, briefly discuss whether Mars Company should consider adopting the direct write-off method of accounting for bad debts rather than the allowance method currently used.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:At December 31, 2019, Mars Company reports the following results for the year:
Cash Sales
Credit Sales
BD525,500
BD620,500
In addition, its unadjusted trial balance includes the following balances.
Accounts receivable
Allowance for doubtful accounts
BD237,500 debit
BD2,800 credit
An aging analysis estimates that 4% of the year-end accounts receivable are
uncollectable.
Required:
A. Prepare the adjusting entry needed for Mars Company to recognize bad
debts on December 31, 2019
B. Prepare an extract from the statement of financial position as at December
31, 2019 showing the effect of the preceding transaction.
C. Using illustrative examples, briefly discuss whether Mars Company
should consider adopting the direct write-off method of accounting for bad
debts rather than the allowance method currently used.
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