At December 31, a company reports the following results for its calendar year. $3,406,000 $1,679,410 Credit sales Cash sales Also, its unadjusted trial balance includes the following items. Accounts receivable. Allowance for doubtful accounts. Required: a. Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be 4% of credit sales. b. Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be 3% of total sales. c. Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be 7% of year-end accounts receivable. 1,032,018 debit $ 17,550 credit
At December 31, a company reports the following results for its calendar year. $3,406,000 $1,679,410 Credit sales Cash sales Also, its unadjusted trial balance includes the following items. Accounts receivable. Allowance for doubtful accounts. Required: a. Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be 4% of credit sales. b. Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be 3% of total sales. c. Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be 7% of year-end accounts receivable. 1,032,018 debit $ 17,550 credit
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.
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Transcribed Image Text:At December 31, a company reports the following results for its calendar year.
- Credit sales: $3,406,000
- Cash sales: $1,679,410
Also, its unadjusted trial balance includes the following items:
- Accounts receivable: $1,032,018 debit
- Allowance for doubtful accounts: $17,550 credit
**Required:**
a. Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be 4% of credit sales.
b. Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be 3% of total sales.
c. Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be 7% of year-end accounts receivable.
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