The following account balances are those of Music Land Supply Company as of December 31, the end of the fiscal year, before adjustments. Accounts Receivable $ 43,600 Allowance for Doubtful Accounts 180 cr. Credit Sales 470,000 Required: Prepare the necessary adjusting entry to record Bad Debt Expense in each of the following independent cases. a. Uncollectible accounts are estimated at 1.5% of credit sales. If an amount box does not require an entry, leave it blank. Page: 1 DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 Dec. 31 Bad Debt Expense fill in the blank 56a9ce08f033003_2 fill in the blank 56a9ce08f033003_3 1 2 Allowance for Doubtful Accounts fill in the blank 56a9ce08f033003_5 fill in the blank 56a9ce08f033003_6 2 b. An aging of the accounts receivable indicates that $6,850 will not be collected. If an amount box does not require an entry, leave it blank. Page: 1 DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 Dec. 31 Bad Debt Expense fill in the blank 23fe0e03f07d051_2 fill in the blank 23fe0e03f07d051_3 1 2 Allowance for Doubtful Accounts fill in the blank 23fe0e03f07d051_5 fill in the blank 23fe0e03f07d051_6 2 c. Assume the same facts in (b), except that the balance in Allowance for Doubtful Accounts is a $420 debit before the adjustment. If an amount box does not require an entry, leave it blank. Page: 1 DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 Dec. 31 fill in the blank 8ca643fa7fbcfb8_2 fill in the blank 8ca643fa7fbcfb8_3 1 2 fill in the blank 8ca643fa7fbcfb8_5 fill in the blank 8ca643fa7fbcfb8_6 2 d. Assume the same facts as in (a), except that the balance in Allowance for Doubtful Accounts is a $350 debit before the adjustment. If an amount box does not require an entry, leave it blank. Page: 1 DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 Dec. 31 fill in the blank fa2e57fb9fcaf9d_2 fill in the blank fa2e57fb9fcaf9d_3 1 2 fill in the blank fa2e57fb9fcaf9d_5 fill in the blank fa2e57fb9fcaf9d_6 2
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.
The following account balances are those of Music Land Supply Company as of December 31, the end of the fiscal year, before adjustments.
|
$ 43,600
|
|||
| Allowance for Doubtful Accounts |
180
|
cr.
|
|
| Credit Sales |
470,000
|
Required:
Prepare the necessary
a. Uncollectible accounts are estimated at 1.5% of credit sales. If an amount box does not require an entry, leave it blank.
| DATE | DESCRIPTION | POST. REF. |
DEBIT | CREDIT | ||
|---|---|---|---|---|---|---|
| 1 | Dec. 31 | Bad Debt Expense | fill in the blank 56a9ce08f033003_2 | fill in the blank 56a9ce08f033003_3 | 1 | |
| 2 | Allowance for Doubtful Accounts | fill in the blank 56a9ce08f033003_5 | fill in the blank 56a9ce08f033003_6 | 2 |
b. An aging of the accounts receivable indicates that $6,850 will not be collected. If an amount box does not require an entry, leave it blank.
| DATE | DESCRIPTION | POST. REF. |
DEBIT | CREDIT | ||
|---|---|---|---|---|---|---|
| 1 | Dec. 31 | Bad Debt Expense | fill in the blank 23fe0e03f07d051_2 | fill in the blank 23fe0e03f07d051_3 | 1 | |
| 2 | Allowance for Doubtful Accounts | fill in the blank 23fe0e03f07d051_5 | fill in the blank 23fe0e03f07d051_6 | 2 |
c. Assume the same facts in (b), except that the balance in Allowance for Doubtful Accounts is a $420 debit before the adjustment. If an amount box does not require an entry, leave it blank.
| DATE | DESCRIPTION | POST. REF. |
DEBIT | CREDIT | ||
|---|---|---|---|---|---|---|
| 1 | Dec. 31 | fill in the blank 8ca643fa7fbcfb8_2 | fill in the blank 8ca643fa7fbcfb8_3 | 1 | ||
| 2 | fill in the blank 8ca643fa7fbcfb8_5 | fill in the blank 8ca643fa7fbcfb8_6 | 2 |
d. Assume the same facts as in (a), except that the balance in Allowance for Doubtful Accounts is a $350 debit before the adjustment. If an amount box does not require an entry, leave it blank.
| DATE | DESCRIPTION | POST. REF. |
DEBIT | CREDIT | ||
|---|---|---|---|---|---|---|
| 1 | Dec. 31 | fill in the blank fa2e57fb9fcaf9d_2 | fill in the blank fa2e57fb9fcaf9d_3 | 1 | ||
| 2 | fill in the blank fa2e57fb9fcaf9d_5 | fill in the blank fa2e57fb9fcaf9d_6 | 2 |
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