Current Attempt in Progress The ledger of Cullumber Company at the end of the current year shows Accounts Receivable $68,000, Credit Sales $810,000, and Sales Returns and Allowances $38,00O. Prepare journal entries for each separate scenario below. If Cullumber Company uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Cullumber Company determines that Matisse's $500 balance is uncollectible. (a) (b) If Allowance for Doubtful Accounts has a credit balance of $900 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 8% of accounts receivable. If Allowance for Doubtful Accounts has a debit balance of $49O in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 7% of accounts receivable. (c)
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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