Bad Debt Expense: Percentage of Credit Sales Method Gilmore Cash sales Credit sales Accounts receivable determined to be uncollectible The firm's estimated rate for bad debts is 2.2% of credit sales. Required: Electronics had the following data for a recent year: 1. Prepare the journal entry to write off the uncollectible accounts. If an amount box does not require an entry, leave it blank. (Record write-off of defaulted account) $135,000 512,000 9,650 2. Prepare the journal entry to record the estimate of bad debt expense. If an amount box does not require an entry, leave it blank. 88 Record adjusting entry for bad debt expense estimate
Bad Debt Expense: Percentage of Credit Sales Method Gilmore Cash sales Credit sales Accounts receivable determined to be uncollectible The firm's estimated rate for bad debts is 2.2% of credit sales. Required: Electronics had the following data for a recent year: 1. Prepare the journal entry to write off the uncollectible accounts. If an amount box does not require an entry, leave it blank. (Record write-off of defaulted account) $135,000 512,000 9,650 2. Prepare the journal entry to record the estimate of bad debt expense. If an amount box does not require an entry, leave it blank. 88 Record adjusting entry for bad debt expense estimate
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Bad Debt Expense: Percentage of Credit Sales Method
Gilmore Electronics had the following data for a recent year:
Cash sales
Credit sales
Accounts receivable determined to be uncollectible
The firm's estimated rate for bad debts is 2.2% of credit sales.
Required:
1. Prepare the journal entry to write off the uncollectible accounts. If an amount box does not require an entry, leave it blank.
88
(Record write-off of defaulted account)
$135,000
512,000
9,650
2. Prepare the journal entry to record the estimate of bad debt expense. If an amount box does not require an entry, leave it blank.
Record adjusting entry for bad debt expense estimate
3. If Gilmore had written off $3,000 of receivables as uncollectible during the year, how much would bad debt expense reported on the income statement have changed? Enter decrease, if any, as negative amount. If an amount is zero,
enter "0".
4. Conceptual Connection: If Gilmore's estimate of bad debts is correct (2.2% of credit sales) and the gross margin is 20%, by how much did Gilmore's income from operations increase assuming $150,000 of the sales would have been lost
if credit sales were not offered?
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