Make the necessary adjusting entry (December 31, 20XX) in general journal form under each of the following assumptions. 1.Allowance for Bad Debts has a credit balance of $870. The percentage of sales method is used, and bad debt expense is estimated to be 1.0% of credit sales. The percentage of receivables method is used and an analysis of the accounts produces an estimate of $1,580 in uncollectible accounts.
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.
- At the completion of the current fiscal year ending December 31, the balance of
Accounts Receivable for Auto Repairs Service was $22,300. Credit sales for the year were $515,000.(11 points)
Required:
Make the necessary
1.Allowance for
- The percentage of sales method is used, and bad debt expense is estimated to be 1.0% of credit sales.
- The percentage of receivables method is used and an analysis of the accounts produces an estimate of $1,580 in uncollectible accounts.
GENERAL JOURNALPage 1
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