Larkspur Inc.’s unadjusted trial balance at December 31, 2020, included the following accounts: Debit Credit Allowance for doubtful accounts $8,000 Sales revenue $2,065,000 Sales returns and allowances 61,300 Sales discounts 3,900 Larkspur estimates its bad debt expense to be 1.5% of net sales. Determine its bad debt expense for 2020. (Round answer to 0 decimal places, e.g. 58,971.) Bad debt expense $Enter your answer in accordance to the question statement
Larkspur Inc.’s unadjusted trial balance at December 31, 2020, included the following accounts: Debit Credit Allowance for doubtful accounts $8,000 Sales revenue $2,065,000 Sales returns and allowances 61,300 Sales discounts 3,900 Larkspur estimates its bad debt expense to be 1.5% of net sales. Determine its bad debt expense for 2020. (Round answer to 0 decimal places, e.g. 58,971.) Bad debt expense $Enter your answer in accordance to the question statement
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
A series of unrelated situations follow for several companies that use ASPE:
(a)
Larkspur Inc.’s unadjusted trial balance at December 31, 2020, included the following accounts:
Larkspur estimates itsbad debt expense to be 1.5% of net sales. Determine its bad debt expense for 2020. (Round answer to 0 decimal places, e.g. 58,971.)
| Debit | Credit | |||
| Allowance for doubtful accounts | $8,000 | |||
| Sales revenue | $2,065,000 | |||
| Sales returns and allowances | 61,300 | |||
| Sales discounts | 3,900 |
Larkspur estimates its
| Bad debt expense | $Enter your answer in accordance to the question statement |
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(b)
The parts of this question must be completed in order. This part will be available when you complete the part above.(c)
The parts of this question must be completed in order. This part will be available when you complete the part above.(d)
The parts of this question must be completed in order. This part will be available when you complete the part above.(e)
The parts of this question must be completed in order. This part will be available when you complete the part above.Expert Solution
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