### Bad Debt Allowance Accounting**Scenario:** Claireco uses the allowance method to write off all bad debts. On 12/31/XX, an aged accounts receivable indicated that the bad debt expense would be $35,000. The balance in the Allowance account on that date was a credit of $8,000. It was also estimated that the bad debts expense for the year would be 1% of the year’s credit sales of $4,000,000.**Required Tasks:** **A.** If informing the banking industry about bad debt exposure, make the necessary journal entry on 12/31/XX. **B.** If informing the stockholders about bad debt exposure, make the necessary journal entry on 12/31/XX.#### Journal Entry Table Template:| DATE | ACCOUNT | DR | CR ||----------|-------------------|------|------|| | | | || | | | |**Explanation:** - The table above is for entering the journal entries required as per the scenarios described.- DR stands for Debit, and CR stands for Credit, which are essential components of the double-entry accounting system. The image contains two accounting scenarios regarding the purchase and depreciation of lathes by two different companies, Meganco and Kenco.### Scenario 1:**Meganco's Lathe Purchase and Depreciation**- **Date of Purchase:** 1/1/18- **Cost:** $400,000 installed- **Physical Life:** 10 years- **Salvage Value:** $20,000- **Contract Duration:** 5 years, with a sales contract at the end for $50,000.- **Depreciation Method:** 200% double declining balance**Required:**- Make journal entries on 12/31/18 and 12/31/19 for depreciation.**Table Layout:**| DATE | ACCOUNT | DR | CR ||------------|---------|----|----|| | | | || | | | || | | | |### Scenario 2:**Kenco's Lathe Purchase and Depreciation**- **Date of Purchase:** 6 years ago- **Cost:** $475,000- **Depreciation Method:** Straight line over 8 years (no salvage value considered)- **Sale Date:** 12/31 of the sixth year- **Sale Price:** $85,000**Required:**- Assume depreciation is up to date. Make journal entries for the sale transaction in Kenco's accounting system.**Table Layout:**| DATE | ACCOUNT | DR | CR ||------------|---------|----|----|| | | | || | | | || | | | |The diagrams present blank tables for recording appropriate journal entries for each scenario.

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On 1/1/18 Meganco purchased a new lathe for $400,000 installed. The physical life of the lathe is 10 years with a salvage value of $20,000 a the end of that time period. The lathe was purchase for a contract that will provide revenue to Meganco for 5 years. The lathe will be sold at the end of the contract for $50,000. Required: Make the required journal entry on 12/31/18 and 12/31/19 assuming that the lathe is depreciated using 200% double declin balanc

On 1/1/18 Meganco purchased a new lathe for $400,000 installed. The physical life of the lathe is 10 years with a salvage value of $20,000 a the end of that time period. The lathe was purchase for a contract that will provide revenue to Meganco for 5 years. The lathe will be sold at the end of the contract for $50,000. Required: Make the required journal entry on 12/31/18 and 12/31/19 assuming that the lathe is depreciated using 200% double declin balanc

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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