The unadjusted trial balance of Conrad ltée included the following information: Cash sales: $250 000 Credit sales: $600 000 Accounts receivable: $160 000 Prepare the journal entries to adjust the Allowance for doubtful accounts (A.F.D.A.) account under each of the following situations: The estimated bad debts are 2.5% of credit sales and the A.F.D.A. account has a $2500 debit balance. The estimated bad debts are 3% of accounts receivable and the A.F.D.A. account has a $2500 credit balance. The estimated bad debts are 3% of accounts receivable and the A.F.D.A. account has a $2500 debit balance. (1/2/3 SEPARATED)
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 unadjusted
Cash sales: $250 000
Credit sales: $600 000
Prepare the
- The estimated
bad debts are 2.5% of credit sales and the A.F.D.A. account has a $2500 debit balance. - The estimated bad debts are 3% of accounts receivable and the A.F.D.A. account has a $2500 credit balance.
- The estimated bad debts are 3% of accounts receivable and the A.F.D.A. account has a $2500 debit balance.
(1/2/3 SEPARATED)
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