accounts receivable of the drummond maufacturing co. on december 31, 20X5 has a

Question

accounts receivable of the drummond maufacturing co. on december 31, 20X5 has a balance of $300,000. allowance for doubtful accounts had a debit balance of 4200. sales for the year were 1,690,000 less sales discounts of 14,000. give the adjusting entry for estimated doubtful accounts expense under each of the following independent assumptions: a) one-half of 1% of net sales will probably never be collected. b) three percent of outstanding accounts receivable are doubtful. c) an aging schedule shows that $11,000 of the outstanding accounts receivable are doubtful.

Explanation / Answer

A. Dr. Bed Debt Expense 12,580 Cr. Allowance for doubtful accounts 12,580 Explanation: 12,580 = ((1,690,000-14,000)*(1/2)/100) + 4,200 Debit balance of allowance for doubtful accounts. B Dr. Bed Debt Expense $13,200 Cr. Allowance for doubtful accounts $13,200 Explanation: $13,200 = ($300,000*3/100) + 4,200 Debit balance of allowance for doubtful accounts. C. Dr. Bed Debt Expense $15,200 Cr. Allowance for doubtful accounts $15,200 Explanation: $15,200 = $11,000 + 4,200 Debit balance of allowance for doubtful accounts.

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