Strawberry Corporation had a 1/01/11 credit balance in the Allowance for Doubtfu

Question

Strawberry Corporation had a 1/01/11 credit balance in the Allowance for Doubtful Accounts of $23,500. During 2011, it wrote off $29,700 of accounts and collected $4,500 on accounts previously written off. The balance in Accounts Receivable was $205,000 at 1/01/11 and $255,000 at 12/31/11. At 12/31/11, Strawberry estimates that 6% of accounts receivable will prove to be uncollectible.


Instructions
Prepare the journal entry to record the bad debt expense at December 31, 2011

 

 

 

 

 

 

 

 

 

 

 

______ Chess Corp. has outstanding accounts receivable totaling $1.27 million as of December 31 and sales on credit during the year of $6.4 million. There is also a debit balance of $3,000 in the allowance for doubtful accounts. If the company estimates that 1% of its net credit sales will be uncollectible, what will be the balance in the allowance for doubtful accounts after the year-end adjustment to record bad debt expense?

 

a.   $12,700.

 

b.   $15,700.

 

c.   $61,000.

 

d.   $67,000.

Explanation / Answer

1. Bad debts $29,700      Provision for bad debts $29,700 Cash $4,500     Bad debts recovered $4,500 Bad debts ($255000 *6%) $15,300      Provision for bad debts $15,300 2. d.   $67,000. Working: Allowance for doubtful account Balance (Negetive balance) $3,000 Current year bad debts (6.4million *6%) $64,000 Closing balance $67,000 Finally allowance for doubtful account is showing $67,000 negetive (Debit) balance Thank you.... Bad debts $29,700      Provision for bad debts $29,700 Cash $4,500     Bad debts recovered $4,500 Bad debts ($255000 *6%) $15,300      Provision for bad debts $15,300

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