On December 31 of the current year, a company’s unadjusted trial balance revealed the following: Accounts Receivable of $575,000; Sales Revenue of $2,367,000 which consists of Cash Sales of $1,025,000 and Credit Sales of $1,342,000); and Allowance for Doubtful Accounts of $7,500 (credit balance). Prepare the adjusting journal entry to record the estimate for bad debts assuming: 6% of the Accounts Receivable balance is to be uncollectible. Bad Debts Expense is estimated to be 2.5% of credit sales. Prepare the entry to write off a $2,400 Account Receivable on January 1 of the next year. 4. There should be three entries that you will record in the general journal. When finished upload your general journal to this problem.
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.
On December 31 of the current year, a company’s unadjusted
Prepare the
- 6% of the Accounts Receivable balance is to be uncollectible.
- Bad Debts Expense is estimated to be 2.5% of credit sales.
- Prepare the entry to write off a $2,400 Account Receivable on January 1 of the next year.
4. There should be three entries that you will record in the general journal. When finished upload your general journal to this problem.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
