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rating vance for Doubtful Accounts Increase, Bad Debts Expense Increase nce Sheet and Income Statement fect the accounting equation? t item is not affected, select "No Entry" and leave the amount box blank. If the eff ncial statement item. Balance Sheet

rating vance for Doubtful Accounts Increase, Bad Debts Expense Increase nce Sheet and Income Statement fect the accounting equation? t item is not affected, select "No Entry" and leave the amount box blank. If the eff ncial statement item. Balance Sheet

FINANCIAL ACCOUNTING
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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I need the balance sheets completed for section 2. Thank you! 

2. Assume instead that the balance in the allowance account is a negative $2,600. How will this affect your answers to part (1)? (a) bad debts expense is expected to be 2% of net credit sales for the year. Activity Operating Accounts Allowance for Doubtful Accounts Increase, Bad Debts Expense Increase Statement(s) Balance Sheet and Income Statement How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item. Balance Sheet Income Statement Stockholders' Net Assets Liabilities Equity Revenues Expenses Income Allowance for Doubtful Accounts No Entry No Entry Bad Debts Expense (b) Romero expects it will not be able to collect 6% of the balance in accounts receivable at year-end. Activity Operating Accounts Allowance for Doubtful Accounts Increase, Bad Debts Expense Increase Statement(s) Balance Sheet and Income Statement How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item. Balance Sheet Income Statement Stockholders' Net Assets Liabilities Equity Revenues Expenses Income Allowance for Doubtful Accounts No Entry No Entry Bad Debts Expense
Transcribed Image Text:2. Assume instead that the balance in the allowance account is a negative $2,600. How will this affect your answers to part (1)? (a) bad debts expense is expected to be 2% of net credit sales for the year. Activity Operating Accounts Allowance for Doubtful Accounts Increase, Bad Debts Expense Increase Statement(s) Balance Sheet and Income Statement How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item. Balance Sheet Income Statement Stockholders' Net Assets Liabilities Equity Revenues Expenses Income Allowance for Doubtful Accounts No Entry No Entry Bad Debts Expense (b) Romero expects it will not be able to collect 6% of the balance in accounts receivable at year-end. Activity Operating Accounts Allowance for Doubtful Accounts Increase, Bad Debts Expense Increase Statement(s) Balance Sheet and Income Statement How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item. Balance Sheet Income Statement Stockholders' Net Assets Liabilities Equity Revenues Expenses Income Allowance for Doubtful Accounts No Entry No Entry Bad Debts Expense
Allowance Method of Accounting for Bad Debts-Comparison of the Two Approaches Romero Corp. had the following data available for 2017 (before making any adjustments): Accounts receivable, 12/31/17 $318,000 Allowance for doubtful accounts 2,600 Net credit sales, 2017 823,000 Required: 1. Identify and analyze the adjustment to recognize bad debts under the following assumptions: (a) bad debts expense is expected to be 2% of net credit sales for the year. Activity Operating Accounts Allowance for Doubtful Accounts Increase, Bad Debts Expense Increase Statement(s) Balance Sheet and Income Statement How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item. Balance Sheet Income Statement Stockholders' Net Assets Liabilities Equity Revenues Expenses Income Allowance for Doubtful Accounts 16,460 No Entry -16,460 No Entry Bad Debts Expense 16,460 -16,460 (b) Romero expects it will not be able to collect 6% of the balance in accounts receivable at year-end. Activity Operating Accounts Allowance for Doubtful Accounts Increase, Bad Debts Expense Increase Statement(s) Balance Sheet and Income Statement
Transcribed Image Text:Allowance Method of Accounting for Bad Debts-Comparison of the Two Approaches Romero Corp. had the following data available for 2017 (before making any adjustments): Accounts receivable, 12/31/17 $318,000 Allowance for doubtful accounts 2,600 Net credit sales, 2017 823,000 Required: 1. Identify and analyze the adjustment to recognize bad debts under the following assumptions: (a) bad debts expense is expected to be 2% of net credit sales for the year. Activity Operating Accounts Allowance for Doubtful Accounts Increase, Bad Debts Expense Increase Statement(s) Balance Sheet and Income Statement How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item. Balance Sheet Income Statement Stockholders' Net Assets Liabilities Equity Revenues Expenses Income Allowance for Doubtful Accounts 16,460 No Entry -16,460 No Entry Bad Debts Expense 16,460 -16,460 (b) Romero expects it will not be able to collect 6% of the balance in accounts receivable at year-end. Activity Operating Accounts Allowance for Doubtful Accounts Increase, Bad Debts Expense Increase Statement(s) Balance Sheet and Income Statement
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