Companies often make credit sales to earn more customers. When they sell merchandise on credit then those are classified as accounts receivable . When companies make credit sales, it expects some customers will not pay and these accounts are classified as uncollectible accounts or bad debts . Companies use two methods for the treatment of bad debts and they are direct write off method and allowance method. Direct write off method − in direct write off method the company records the loss from uncollectible accounts and in this method they do not predict bad debts expense. Allowance method − in this method the company makes estimate of the bad debts expense in reference to the sales made. The estimated bad debts expense is adjusted at the end of the each accounting period. To calculate: Santana Rey total revenues of $44,000 during the first three months of 2020 and that the Accounts Receivable balance on March 31, 2020, is $22,867. Use this information to prepare adjusting entries for bad debts if the bad debts are estimated as: 1% of total revenues 2% of accounts receivable

Question

Want to see the full answer?

Answer 1

Question

Chapter 9, Problem 9SP

To determine

Introduction:

Companies often make credit sales to earn more customers. When they sell merchandise on credit then those are classified as accounts receivable. When companies make credit sales, it expects some customers will not pay and these accounts are classified as uncollectible accounts or bad debts. Companies use two methods for the treatment of bad debts and they are direct write off method and allowance method.

Direct write off method − in direct write off method the company records the loss from uncollectible accounts and in this method they do not predict bad debts expense.

Allowance method − in this method the company makes estimate of the bad debts expense in reference to the sales made. The estimated bad debts expense is adjusted at the end of the each accounting period.

To calculate:

Santana Rey total revenues of $44,000 during the first three months of 2020 and that the Accounts Receivable balance on March 31, 2020, is $22,867. Use this information to prepare adjusting entries for bad debts if the bad debts are estimated as:

1% of total revenues

2% of accounts receivable

To determine

Introduction:

Companies often make credit sales to earn more customers. When they sell merchandise on credit then those are classified as accounts receivable. When companies make credit sales, it expects some customers will not pay and these accounts are classified as uncollectible accounts or bad debts. Companies use two methods for the treatment of bad debts and they are direct write off method and allowance method.

Direct write off method − in direct write off method the company records the loss from uncollectible accounts and in this method they do not predict bad debts expense.

Allowance method − in this method the company makes estimate of the bad debts expense in reference to the sales made. The estimated bad debts expense is adjusted at the end of the each accounting period.

To calculate:

Santana Rey total revenues of $44,000 during the first three months of 2020 and that the Accounts Receivable balance on March 31, 2020, is $22,867. Use this information to prepare adjusting entries for bad debts if the accounts receivable balance at June 30, 2020, is $20,250 and that one account of $100 has been written off against the Allowance for Doubtful Accounts since March 31, 2020.

To determine

Introduction:

Payroll of a company consists of the wages, salaries, and employee benefits and taxes deductions. The gross pay is total compensation of an employee that includes wages, salaries and benefits without deducting any taxes. Payroll deductions include FICA social security taxed, FICA Medicare taxed, Income tax deductions and other deductions.

To calculate:

To determine whether Rey should consider using the direct write-off method of accounting or the allowance methods for his business.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

I need help solving this financial accounting question with the proper methodology.

Please fill the empty cell in this problem. It is the only thing I need.

Please explain the solution to this financial accounting problem with accurate principles.

Answer 2

Question

Chapter 9, Problem 9SP

To determine

Introduction:

Companies often make credit sales to earn more customers. When they sell merchandise on credit then those are classified as accounts receivable. When companies make credit sales, it expects some customers will not pay and these accounts are classified as uncollectible accounts or bad debts. Companies use two methods for the treatment of bad debts and they are direct write off method and allowance method.

Direct write off method − in direct write off method the company records the loss from uncollectible accounts and in this method they do not predict bad debts expense.

Allowance method − in this method the company makes estimate of the bad debts expense in reference to the sales made. The estimated bad debts expense is adjusted at the end of the each accounting period.

To calculate:

Santana Rey total revenues of $44,000 during the first three months of 2020 and that the Accounts Receivable balance on March 31, 2020, is $22,867. Use this information to prepare adjusting entries for bad debts if the bad debts are estimated as:

1% of total revenues

2% of accounts receivable

To determine

Introduction:

Companies often make credit sales to earn more customers. When they sell merchandise on credit then those are classified as accounts receivable. When companies make credit sales, it expects some customers will not pay and these accounts are classified as uncollectible accounts or bad debts. Companies use two methods for the treatment of bad debts and they are direct write off method and allowance method.

Direct write off method − in direct write off method the company records the loss from uncollectible accounts and in this method they do not predict bad debts expense.

Allowance method − in this method the company makes estimate of the bad debts expense in reference to the sales made. The estimated bad debts expense is adjusted at the end of the each accounting period.

To calculate:

Santana Rey total revenues of $44,000 during the first three months of 2020 and that the Accounts Receivable balance on March 31, 2020, is $22,867. Use this information to prepare adjusting entries for bad debts if the accounts receivable balance at June 30, 2020, is $20,250 and that one account of $100 has been written off against the Allowance for Doubtful Accounts since March 31, 2020.

To determine

Introduction:

Payroll of a company consists of the wages, salaries, and employee benefits and taxes deductions. The gross pay is total compensation of an employee that includes wages, salaries and benefits without deducting any taxes. Payroll deductions include FICA social security taxed, FICA Medicare taxed, Income tax deductions and other deductions.

To calculate:

To determine whether Rey should consider using the direct write-off method of accounting or the allowance methods for his business.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 9, Problem 9SP

To determine

Introduction:

Companies often make credit sales to earn more customers. When they sell merchandise on credit then those are classified as accounts receivable. When companies make credit sales, it expects some customers will not pay and these accounts are classified as uncollectible accounts or bad debts. Companies use two methods for the treatment of bad debts and they are direct write off method and allowance method.

Direct write off method − in direct write off method the company records the loss from uncollectible accounts and in this method they do not predict bad debts expense.

Allowance method − in this method the company makes estimate of the bad debts expense in reference to the sales made. The estimated bad debts expense is adjusted at the end of the each accounting period.

To calculate:

Santana Rey total revenues of $44,000 during the first three months of 2020 and that the Accounts Receivable balance on March 31, 2020, is $22,867. Use this information to prepare adjusting entries for bad debts if the bad debts are estimated as:

1% of total revenues

2% of accounts receivable

To determine

Introduction:

Companies often make credit sales to earn more customers. When they sell merchandise on credit then those are classified as accounts receivable. When companies make credit sales, it expects some customers will not pay and these accounts are classified as uncollectible accounts or bad debts. Companies use two methods for the treatment of bad debts and they are direct write off method and allowance method.

Direct write off method − in direct write off method the company records the loss from uncollectible accounts and in this method they do not predict bad debts expense.

Allowance method − in this method the company makes estimate of the bad debts expense in reference to the sales made. The estimated bad debts expense is adjusted at the end of the each accounting period.

To calculate:

Santana Rey total revenues of $44,000 during the first three months of 2020 and that the Accounts Receivable balance on March 31, 2020, is $22,867. Use this information to prepare adjusting entries for bad debts if the accounts receivable balance at June 30, 2020, is $20,250 and that one account of $100 has been written off against the Allowance for Doubtful Accounts since March 31, 2020.

To determine

Introduction:

Payroll of a company consists of the wages, salaries, and employee benefits and taxes deductions. The gross pay is total compensation of an employee that includes wages, salaries and benefits without deducting any taxes. Payroll deductions include FICA social security taxed, FICA Medicare taxed, Income tax deductions and other deductions.

To calculate:

To determine whether Rey should consider using the direct write-off method of accounting or the allowance methods for his business.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 9, Problem 9SP

To determine

Introduction:

Companies often make credit sales to earn more customers. When they sell merchandise on credit then those are classified as accounts receivable. When companies make credit sales, it expects some customers will not pay and these accounts are classified as uncollectible accounts or bad debts. Companies use two methods for the treatment of bad debts and they are direct write off method and allowance method.

Direct write off method − in direct write off method the company records the loss from uncollectible accounts and in this method they do not predict bad debts expense.

Allowance method − in this method the company makes estimate of the bad debts expense in reference to the sales made. The estimated bad debts expense is adjusted at the end of the each accounting period.

To calculate:

Santana Rey total revenues of $44,000 during the first three months of 2020 and that the Accounts Receivable balance on March 31, 2020, is $22,867. Use this information to prepare adjusting entries for bad debts if the bad debts are estimated as:

1% of total revenues

2% of accounts receivable

To determine

Introduction:

Companies often make credit sales to earn more customers. When they sell merchandise on credit then those are classified as accounts receivable. When companies make credit sales, it expects some customers will not pay and these accounts are classified as uncollectible accounts or bad debts. Companies use two methods for the treatment of bad debts and they are direct write off method and allowance method.

Direct write off method − in direct write off method the company records the loss from uncollectible accounts and in this method they do not predict bad debts expense.

Allowance method − in this method the company makes estimate of the bad debts expense in reference to the sales made. The estimated bad debts expense is adjusted at the end of the each accounting period.

To calculate:

Santana Rey total revenues of $44,000 during the first three months of 2020 and that the Accounts Receivable balance on March 31, 2020, is $22,867. Use this information to prepare adjusting entries for bad debts if the accounts receivable balance at June 30, 2020, is $20,250 and that one account of $100 has been written off against the Allowance for Doubtful Accounts since March 31, 2020.

To determine

Introduction:

Payroll of a company consists of the wages, salaries, and employee benefits and taxes deductions. The gross pay is total compensation of an employee that includes wages, salaries and benefits without deducting any taxes. Payroll deductions include FICA social security taxed, FICA Medicare taxed, Income tax deductions and other deductions.

To calculate:

To determine whether Rey should consider using the direct write-off method of accounting or the allowance methods for his business.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 9, Problem 9SP

To determine

Introduction:

Companies often make credit sales to earn more customers. When they sell merchandise on credit then those are classified as accounts receivable. When companies make credit sales, it expects some customers will not pay and these accounts are classified as uncollectible accounts or bad debts. Companies use two methods for the treatment of bad debts and they are direct write off method and allowance method.

Direct write off method − in direct write off method the company records the loss from uncollectible accounts and in this method they do not predict bad debts expense.

Allowance method − in this method the company makes estimate of the bad debts expense in reference to the sales made. The estimated bad debts expense is adjusted at the end of the each accounting period.

To calculate:

Santana Rey total revenues of $44,000 during the first three months of 2020 and that the Accounts Receivable balance on March 31, 2020, is $22,867. Use this information to prepare adjusting entries for bad debts if the bad debts are estimated as:

1% of total revenues

2% of accounts receivable

To determine

Introduction:

Companies often make credit sales to earn more customers. When they sell merchandise on credit then those are classified as accounts receivable. When companies make credit sales, it expects some customers will not pay and these accounts are classified as uncollectible accounts or bad debts. Companies use two methods for the treatment of bad debts and they are direct write off method and allowance method.

Direct write off method − in direct write off method the company records the loss from uncollectible accounts and in this method they do not predict bad debts expense.

Allowance method − in this method the company makes estimate of the bad debts expense in reference to the sales made. The estimated bad debts expense is adjusted at the end of the each accounting period.

To calculate:

Santana Rey total revenues of $44,000 during the first three months of 2020 and that the Accounts Receivable balance on March 31, 2020, is $22,867. Use this information to prepare adjusting entries for bad debts if the accounts receivable balance at June 30, 2020, is $20,250 and that one account of $100 has been written off against the Allowance for Doubtful Accounts since March 31, 2020.

To determine

Introduction:

Payroll of a company consists of the wages, salaries, and employee benefits and taxes deductions. The gross pay is total compensation of an employee that includes wages, salaries and benefits without deducting any taxes. Payroll deductions include FICA social security taxed, FICA Medicare taxed, Income tax deductions and other deductions.

To calculate:

To determine whether Rey should consider using the direct write-off method of accounting or the allowance methods for his business.

Answer 6

Chapter 9, Problem 9SP

To determine

Introduction:

Companies often make credit sales to earn more customers. When they sell merchandise on credit then those are classified as accounts receivable. When companies make credit sales, it expects some customers will not pay and these accounts are classified as uncollectible accounts or bad debts. Companies use two methods for the treatment of bad debts and they are direct write off method and allowance method.

Direct write off method − in direct write off method the company records the loss from uncollectible accounts and in this method they do not predict bad debts expense.

Allowance method − in this method the company makes estimate of the bad debts expense in reference to the sales made. The estimated bad debts expense is adjusted at the end of the each accounting period.

To calculate:

Santana Rey total revenues of $44,000 during the first three months of 2020 and that the Accounts Receivable balance on March 31, 2020, is $22,867. Use this information to prepare adjusting entries for bad debts if the bad debts are estimated as:

1% of total revenues

2% of accounts receivable

Answer 7

Chapter 9, Problem 9SP

To determine

Introduction:

Companies often make credit sales to earn more customers. When they sell merchandise on credit then those are classified as accounts receivable. When companies make credit sales, it expects some customers will not pay and these accounts are classified as uncollectible accounts or bad debts. Companies use two methods for the treatment of bad debts and they are direct write off method and allowance method.

Direct write off method − in direct write off method the company records the loss from uncollectible accounts and in this method they do not predict bad debts expense.

Allowance method − in this method the company makes estimate of the bad debts expense in reference to the sales made. The estimated bad debts expense is adjusted at the end of the each accounting period.

To calculate:

Santana Rey total revenues of $44,000 during the first three months of 2020 and that the Accounts Receivable balance on March 31, 2020, is $22,867. Use this information to prepare adjusting entries for bad debts if the bad debts are estimated as:

1% of total revenues

2% of accounts receivable

Answer 8

To determine

Introduction:

Companies often make credit sales to earn more customers. When they sell merchandise on credit then those are classified as accounts receivable. When companies make credit sales, it expects some customers will not pay and these accounts are classified as uncollectible accounts or bad debts. Companies use two methods for the treatment of bad debts and they are direct write off method and allowance method.

Direct write off method − in direct write off method the company records the loss from uncollectible accounts and in this method they do not predict bad debts expense.

Allowance method − in this method the company makes estimate of the bad debts expense in reference to the sales made. The estimated bad debts expense is adjusted at the end of the each accounting period.

To calculate:

Santana Rey total revenues of $44,000 during the first three months of 2020 and that the Accounts Receivable balance on March 31, 2020, is $22,867. Use this information to prepare adjusting entries for bad debts if the accounts receivable balance at June 30, 2020, is $20,250 and that one account of $100 has been written off against the Allowance for Doubtful Accounts since March 31, 2020.

Answer 9

To determine

Introduction:

Companies often make credit sales to earn more customers. When they sell merchandise on credit then those are classified as accounts receivable. When companies make credit sales, it expects some customers will not pay and these accounts are classified as uncollectible accounts or bad debts. Companies use two methods for the treatment of bad debts and they are direct write off method and allowance method.

Direct write off method − in direct write off method the company records the loss from uncollectible accounts and in this method they do not predict bad debts expense.

Allowance method − in this method the company makes estimate of the bad debts expense in reference to the sales made. The estimated bad debts expense is adjusted at the end of the each accounting period.

To calculate:

Santana Rey total revenues of $44,000 during the first three months of 2020 and that the Accounts Receivable balance on March 31, 2020, is $22,867. Use this information to prepare adjusting entries for bad debts if the accounts receivable balance at June 30, 2020, is $20,250 and that one account of $100 has been written off against the Allowance for Doubtful Accounts since March 31, 2020.

Answer 10

To determine

Introduction:

Payroll of a company consists of the wages, salaries, and employee benefits and taxes deductions. The gross pay is total compensation of an employee that includes wages, salaries and benefits without deducting any taxes. Payroll deductions include FICA social security taxed, FICA Medicare taxed, Income tax deductions and other deductions.

To calculate:

To determine whether Rey should consider using the direct write-off method of accounting or the allowance methods for his business.

Answer 11

To determine

Introduction:

Payroll of a company consists of the wages, salaries, and employee benefits and taxes deductions. The gross pay is total compensation of an employee that includes wages, salaries and benefits without deducting any taxes. Payroll deductions include FICA social security taxed, FICA Medicare taxed, Income tax deductions and other deductions.

To calculate:

To determine whether Rey should consider using the direct write-off method of accounting or the allowance methods for his business.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 15

Ch. 9 - Credit card sales Prepare journal entries for the...Ch. 9 - Direct write-off method P1 Solstice Company...Ch. 9 - Recovering a bad debt P1 Solstice Company...Ch. 9 - Distinguishing between allowance method and direct...Ch. 9 - Prob. 5QS Ch. 9 - Allowance method for bad debts P2 Gomez Corp. uses...Ch. 9 - Reporting allowance for doubtful accounts P2 On...Ch. 9 - Prob. 8QS Ch. 9 - Prob. 9QS Ch. 9 - Aging of receivables method P3 ^ Net Zero...

Concept explainers

Videos

Want to see the full answer?

Chapter 9 Solutions