Question 14 Santagos Industries gathered the following information from its accounting records for the year ended December 31, 2019, prior to adjustment: Net credit sales for the year $730,000 Accounts receivable balance, Dec. 31, 2019 145,000 Allowance for doubtful accounts balance, Dec. 31, 2019 1,850 Cr. Santagos uses the allowance method of accounting for uncollectible accounts and estimates bad-debt expense at 1.5% of net credit sales. Required: a) Prepare the adjusting entry to record bad-debt expense on December 31, 2019. b) Determine the balance in allowance for doubtful accounts after the adjusting entry is prepared. c) Show how the receivables would be reported on the December 31, 2019, balance sheet for Santagos Industries.
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.
Question 14
Santagos Industries gathered the following information from its accounting records for the year ended December 31, 2019, prior to adjustment:
Net credit sales for the year $730,000
Allowance for doubtful
accounts balance, Dec. 31, 2019 1,850 Cr.
Santagos uses the allowance method of accounting for uncollectible accounts and estimates bad-debt expense at 1.5% of net credit sales.
Required:
a) Prepare the
b) Determine the balance in allowance for doubtful accounts after the adjusting entry is prepared.
c) Show how the receivables would be reported on the December 31, 2019,
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