During 2015, Lacee Enterprises had gross sales of $247,000. At the end of 2015, Lacee had accounts receivable of $83,000 and a credit balance of $5,600 in Allowance for Bad Debts. Lacee has used the percentage-of-gross-sales method to estimate the bad debt expense. For the past several years, the amount estimated to be uncollectible has been 3%. INSTRUCTIONS: Using the percentage-of-gross-sales method, estimate the bad debt expense and make any necessary adjusting entries. Assuming that 6% of receivables are estimated to be uncollectible and that Lacee decides to use the percentage-of-receivables method to estimate the bad debt expense, estimate the bad debt expense and make any adjusting entries. Which of the two methods more accurately reflects the net realizable value of receivables? Explain.
During 2015, Lacee Enterprises had gross sales of $247,000. At the end of 2015, Lacee had
INSTRUCTIONS:
-
Using the percentage-of-gross-sales method, estimate the bad debt expense and make any necessary
adjusting entries . -
Assuming that 6% of receivables are estimated to be uncollectible and that Lacee decides to use the percentage-of-receivables method to estimate the bad debt expense, estimate the bad debt expense and make any adjusting entries.
-
Which of the two methods more accurately reflects the net realizable value of receivables? Explain.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
