PA8-1 (Algo) Recording Accounts Receivable Transactions Using the Aging Method [LO 8-2] Grouch Mayor Companies was formed in 2015 with the merger of Henderson Incorporated and Tashamo Corporation. The company reported the following rounded amounts for the year ended December 29, 2018 (all amounts in millions): Debits $ 1,090 Credits Accounts Receivable Allowance for Doubtful Accounts Sales (assume all on credit) Required: 1. Assume Grouch Mayor uses 1/4 of 1 percent of sales to estimate its Bad Debt Expense for the year. Prepare the adjusting journal entry required for the year, assuming no Bad Debt Expense has been recorded yet. 2. Assume instead Grouch Mayor uses the aging of accounts receivable method and estimates that $72 of its Accounts Receivable will be uncollectible. Prepare the adjusting journal entry required at December 29, 2018, for recording Bad Debt Expense. 3. Assume instead Grouch Mayor's uses the aging of accounts receivable method and estimates that $72 of its Accounts Receivable will be uncollectible. Prepare the adjusting journal entry required at December 29, 2018, for recording Bad Debt Expense assuming Grouch Mayor's unadjusted balance in Allowance for Doubtful Accounts at December 29, 2018, was a debit balance of $33. 4. If one of Grouch Mayor's customers declared bankruptcy, what journal entry would be used to write off its $15 balance? $ 27 18,000
PA8-1 (Algo) Recording Accounts Receivable Transactions Using the Aging Method [LO 8-2] Grouch Mayor Companies was formed in 2015 with the merger of Henderson Incorporated and Tashamo Corporation. The company reported the following rounded amounts for the year ended December 29, 2018 (all amounts in millions): Debits $ 1,090 Credits Accounts Receivable Allowance for Doubtful Accounts Sales (assume all on credit) Required: 1. Assume Grouch Mayor uses 1/4 of 1 percent of sales to estimate its Bad Debt Expense for the year. Prepare the adjusting journal entry required for the year, assuming no Bad Debt Expense has been recorded yet. 2. Assume instead Grouch Mayor uses the aging of accounts receivable method and estimates that $72 of its Accounts Receivable will be uncollectible. Prepare the adjusting journal entry required at December 29, 2018, for recording Bad Debt Expense. 3. Assume instead Grouch Mayor's uses the aging of accounts receivable method and estimates that $72 of its Accounts Receivable will be uncollectible. Prepare the adjusting journal entry required at December 29, 2018, for recording Bad Debt Expense assuming Grouch Mayor's unadjusted balance in Allowance for Doubtful Accounts at December 29, 2018, was a debit balance of $33. 4. If one of Grouch Mayor's customers declared bankruptcy, what journal entry would be used to write off its $15 balance? $ 27 18,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![### PA8-1 (Algo) Recording Accounts Receivable Transactions Using the Aging Method [LO 8-2]
Grouch Mayor Companies was formed in 2015 with the merger of Henderson Incorporated and Tashamo Corporation. The company reported the following rounded amounts for the year ended December 29, 2018 (all amounts in millions):
| Accounts | Debits | Credits |
|---|---|---|
| Accounts Receivable | $1,090 | |
| Allowance for Doubtful Accounts | | $27 |
| Sales (assume all on credit) | | $18,000 |
#### Required:
1. **Estimate Bad Debt Expense Using Sales Percentage:**
Assume Grouch Mayor uses 1/4 of 1 percent of sales to estimate its Bad Debt Expense for the year. Prepare the adjusting journal entry required for the year, assuming no Bad Debt Expense has been recorded yet.
2. **Estimate Bad Debt Expense Using Aging of Accounts Receivable:**
Assume instead Grouch Mayor uses the aging of accounts receivable method and estimates that $72 of its Accounts Receivable will be uncollectible. Prepare the adjusting journal entry required at December 29, 2018, for recording Bad Debt Expense.
3. **Aging Method with Unadjusted Balance:**
Assume instead Grouch Mayor uses the aging of accounts receivable method and estimates that $72 of its Accounts Receivable will be uncollectible. Prepare the adjusting journal entry required at December 29, 2018, for recording Bad Debt Expense assuming Grouch Mayor’s unadjusted balance in Allowance for Doubtful Accounts at December 29, 2018, was a debit balance of $33.
4. **Writing Off a Customer's Balance:**
If one of Grouch Mayor’s customers declared bankruptcy, what journal entry would be used to write off its $15 balance?
### Instructions for Completing the Exercises
Complete this question by entering your answers in the tabs below.
- **Required 1:** Assume Grouch Mayor uses 1/4 of 1 percent of sales to estimate its Bad Debt Expense for the year. Prepare the adjusting journal entry required for the year, assuming no Bad Debt Expense has been recorded yet. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F97184fab-fce4-43b1-85fd-c47064c00bbe%2F1f6cc8b6-b1c1-494d-8c2f-567bbb74339d%2Fn5p9deg_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### PA8-1 (Algo) Recording Accounts Receivable Transactions Using the Aging Method [LO 8-2]
Grouch Mayor Companies was formed in 2015 with the merger of Henderson Incorporated and Tashamo Corporation. The company reported the following rounded amounts for the year ended December 29, 2018 (all amounts in millions):
| Accounts | Debits | Credits |
|---|---|---|
| Accounts Receivable | $1,090 | |
| Allowance for Doubtful Accounts | | $27 |
| Sales (assume all on credit) | | $18,000 |
#### Required:
1. **Estimate Bad Debt Expense Using Sales Percentage:**
Assume Grouch Mayor uses 1/4 of 1 percent of sales to estimate its Bad Debt Expense for the year. Prepare the adjusting journal entry required for the year, assuming no Bad Debt Expense has been recorded yet.
2. **Estimate Bad Debt Expense Using Aging of Accounts Receivable:**
Assume instead Grouch Mayor uses the aging of accounts receivable method and estimates that $72 of its Accounts Receivable will be uncollectible. Prepare the adjusting journal entry required at December 29, 2018, for recording Bad Debt Expense.
3. **Aging Method with Unadjusted Balance:**
Assume instead Grouch Mayor uses the aging of accounts receivable method and estimates that $72 of its Accounts Receivable will be uncollectible. Prepare the adjusting journal entry required at December 29, 2018, for recording Bad Debt Expense assuming Grouch Mayor’s unadjusted balance in Allowance for Doubtful Accounts at December 29, 2018, was a debit balance of $33.
4. **Writing Off a Customer's Balance:**
If one of Grouch Mayor’s customers declared bankruptcy, what journal entry would be used to write off its $15 balance?
### Instructions for Completing the Exercises
Complete this question by entering your answers in the tabs below.
- **Required 1:** Assume Grouch Mayor uses 1/4 of 1 percent of sales to estimate its Bad Debt Expense for the year. Prepare the adjusting journal entry required for the year, assuming no Bad Debt Expense has been recorded yet. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should
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