PROBLEMS Problem 5-1 (IAA) Marvelous Company reported the following information before adjustments at year-end: 500,000 200,000 Accounts receivable Notes receivable Allowance for doubtful accounts Sales Sales return and allowances Sales discount 20,000 5,000,000 30,000 20,000 Required: Prepare adjusting entry to provide for doubtful accounts under each of the following independent assumptions: a. Past experience indicates that 75% of all sales are credit sales and that an average 2% of credit sales may prove uncollectible. b. One percent of gross sales may prove uncollectible. c. An analysis of the aging of trade receivables indicates that accounts receivable in the amount of P80,000 may prove uncollectible. d. The policy is to maintain an allowance for doubtful accounts equal to 10% of the outstanding accounts receivable.

PROBLEMS Problem 5-1 (IAA) Marvelous Company reported the following information before adjustments at year-end: 500,000 200,000 Accounts receivable Notes receivable Allowance for doubtful accounts Sales Sales return and allowances Sales discount 20,000 5,000,000 30,000 20,000 Required: Prepare adjusting entry to provide for doubtful accounts under each of the following independent assumptions: a. Past experience indicates that 75% of all sales are credit sales and that an average 2% of credit sales may prove uncollectible. b. One percent of gross sales may prove uncollectible. c. An analysis of the aging of trade receivables indicates that accounts receivable in the amount of P80,000 may prove uncollectible. d. The policy is to maintain an allowance for doubtful accounts equal to 10% of the outstanding accounts receivable.

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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A trial balance before adjustments included the following: Debit Credit Sales $1650000 Sales returns and allowance $56400 Accounts receivable 160000 Allowance for doubtful accounts 2120 If the estimate of uncollectible accounts is made by taking 6% of gross accounts receivables, the amount of the adjustment is $9473. $11720. $7480. $9600.
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