
Concept explainers
It refers to the amount that is to be received by a company for providing goods and services on credit. It is an asset account.
It refers to the amount that was expected to be received on credit sales but went uncollectible. It is a loss to the company.
It means record of financial data related to business transactions in a journal in a systematic manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.
Rules of Journal Entry:
The rules for journal entry are defined by 5 accounting components,
- Assets: Increase in asset should be debit and decrease should be credit.
- Liabilities: Increase in liabilities should be credit and decrease should be debit.
- Equity: Increase in Equity should be credit and decrease should be debit.
- Expense: Increase in expense should be debit and decrease should be credit.
- Revenue: Increase in revenue should be credit and decrease should be debit.
a.
To prepare: Adjustment entry to record the bad debts expense with 3% uncollectible of credit sales.
b.
To prepare: Adjusting entry to record bad debts expense with 1% uncollectible of total sales.
c.
To prepare: Adjusting entry to record dab debts expense with 6% uncollectible of accounts receivable at the end of the year.

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Chapter 7 Solutions
Gen Combo Ll Financial Accounting Fundamentals; Connect Access Card
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