Financial and Managerial Accounting
Financial and Managerial Accounting
7th Edition
ISBN: 9781259726705
Author: John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Chapter 7, Problem 6E
To determine

Journal Entry:

It means record of financial data related to business transactions in a journal in a 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.

Percentage of Accounts Receivable Method: It refers to a method of calculating bad debt expense by a company on the basis of a percentage over accounts receivable. This method defines the amount of bad debts as a percentage of accounts receivable.

To prepare: Adjustment entry to record the given transactions for uncollectible.

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Accounts Receivable and Accounts Payable; Author: The Finance Storyteller;https://www.youtube.com/watch?v=x_aUWbQa878;License: Standard Youtube License