Instructions X Cha Bradford Company's accounting records on December 31, 2019, provide the following information (prior to adjustment): Cash sales $ 93,100 Net credit sales 283,600 Total sales (net) $376,700 Accounts receivable 131,300 Allowance for doubtful accounts 2,150 (credit) Required: 1. Prepare the journal entries to record the estimate of Bradford's bad debt expense for 2019 assuming: A Bad debts are estimated to be 2% of net credit sales. B. Bad debts are estimated to be 5% of gross accounts receivable. 2. Next Level Discuss the advantages and disadvantages of the balance sheet and income statement approaches to estimating bad debt.
Instructions X Cha Bradford Company's accounting records on December 31, 2019, provide the following information (prior to adjustment): Cash sales $ 93,100 Net credit sales 283,600 Total sales (net) $376,700 Accounts receivable 131,300 Allowance for doubtful accounts 2,150 (credit) Required: 1. Prepare the journal entries to record the estimate of Bradford's bad debt expense for 2019 assuming: A Bad debts are estimated to be 2% of net credit sales. B. Bad debts are estimated to be 5% of gross accounts receivable. 2. Next Level Discuss the advantages and disadvantages of the balance sheet and income statement approaches to estimating bad debt.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Instructions
Chart of Accounts
General Journal
Bradford Company's accounting records on December 31, 2019, provide the following
CHART OF ACCOUNTS
1a. Prepare the journal entries to record the estimate of Bradford's bad debt expense on December 31 assuming bad debts are
information (prior to adjustment):
estimated to be 2% of net credit sales.
Bradford Company
General Ledger
Cash sales
$ 93,100
General Journal Instructions
Net credit sales
283,600
ASSETS
REVENUE
Total sales (net)
$376,700
111 Cash
411 Sales Revenue
PAGE 1
121 Accounts Receivable
Accounts receivable
131,300
GENERAL JOURNAL
122 Allowance for Doubtful
EXPENSES
Allowance for doubtful accounts
2,150
(credit)
Accounts
500 Cost of Goods Sold
DATE
ACCOUNT TITLE
POST. REF.
DEBIT
CREDIT
1
141 Inventory
511 Insurance Expense
Required:
152 Prepaid Insurance
512 Utilities Expense
2
1. Prepare the journal entries to record the estimate of Bradford's bad debt expense for
181 Equipment
521 Salaries Expense
2019 assuming:
198 Accumulated Depreciation
532 Bad Debt Expense
A. Bad debts are estimated to be 2% of net credit sales.
540 Interest Expense
16. Prepare the journal entries to record the estimate of Bradford's bad debt expense on December 31 assuming bad debts are
B. Bad debts are estimated to be 5% of gross accounts receivable.
LIABILITIES
541 Depreciation Expense
estimated to be 5% of gross accounts receivable.
2. Next Level Discuss the advantages and disadvantages of the balance sheet and
211 Accounts Payable
559 Miscellaneous
income statement approaches to estimating bad debt.
231 Salaries Payable
Expenses
General Journal Instructions
250 Unearned Revenue
910 Income Tax Expense
261 Income Taxes Payable
PAGE 1
GENERAL JOURNAL
EQUITY
311 Common Stock
DATE
ACCOUNT TITLE
POST. REF.
DEBIT
CREDIT
331 Retained Earnings
2
Next Level
2. Discuss the advantages and disadvantages of the balance sheet and income statement approaches to estimating bad debt.
The main advantage of the income statement approach is that it is relatively straightforward. However, since this approach does not consider the
it could result in accounts receivable balances that are not properly valued at their net realizable value.
The main advantage of the balance sheet approach is that it gives the best valuation of accounts receivable (at its net realizable value). However, it does not do as good a job with](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4a838c8e-9209-4b5d-b96a-c966f484a578%2F089ad228-3e98-4781-9d93-e92b80f3946d%2Fjveenvd_processed.png&w=3840&q=75)
Transcribed Image Text:Instructions
Chart of Accounts
General Journal
Bradford Company's accounting records on December 31, 2019, provide the following
CHART OF ACCOUNTS
1a. Prepare the journal entries to record the estimate of Bradford's bad debt expense on December 31 assuming bad debts are
information (prior to adjustment):
estimated to be 2% of net credit sales.
Bradford Company
General Ledger
Cash sales
$ 93,100
General Journal Instructions
Net credit sales
283,600
ASSETS
REVENUE
Total sales (net)
$376,700
111 Cash
411 Sales Revenue
PAGE 1
121 Accounts Receivable
Accounts receivable
131,300
GENERAL JOURNAL
122 Allowance for Doubtful
EXPENSES
Allowance for doubtful accounts
2,150
(credit)
Accounts
500 Cost of Goods Sold
DATE
ACCOUNT TITLE
POST. REF.
DEBIT
CREDIT
1
141 Inventory
511 Insurance Expense
Required:
152 Prepaid Insurance
512 Utilities Expense
2
1. Prepare the journal entries to record the estimate of Bradford's bad debt expense for
181 Equipment
521 Salaries Expense
2019 assuming:
198 Accumulated Depreciation
532 Bad Debt Expense
A. Bad debts are estimated to be 2% of net credit sales.
540 Interest Expense
16. Prepare the journal entries to record the estimate of Bradford's bad debt expense on December 31 assuming bad debts are
B. Bad debts are estimated to be 5% of gross accounts receivable.
LIABILITIES
541 Depreciation Expense
estimated to be 5% of gross accounts receivable.
2. Next Level Discuss the advantages and disadvantages of the balance sheet and
211 Accounts Payable
559 Miscellaneous
income statement approaches to estimating bad debt.
231 Salaries Payable
Expenses
General Journal Instructions
250 Unearned Revenue
910 Income Tax Expense
261 Income Taxes Payable
PAGE 1
GENERAL JOURNAL
EQUITY
311 Common Stock
DATE
ACCOUNT TITLE
POST. REF.
DEBIT
CREDIT
331 Retained Earnings
2
Next Level
2. Discuss the advantages and disadvantages of the balance sheet and income statement approaches to estimating bad debt.
The main advantage of the income statement approach is that it is relatively straightforward. However, since this approach does not consider the
it could result in accounts receivable balances that are not properly valued at their net realizable value.
The main advantage of the balance sheet approach is that it gives the best valuation of accounts receivable (at its net realizable value). However, it does not do as good a job with
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