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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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
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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