Question 1: Burl Brothers provided the following information regarding its accou

Question

Question 1: Burl Brothers provided the following information regarding its accounts receivable at the beginning of the current year:

The company reported net credit sales of $21,000,000 during the year, of which it collected $9,900,000. The company wrote off $51,000 of actual bad debts for the year. Burl Brothers estimates the allowance for doubtful accounts at 4% of the ending accounts receivable balance. Prepare the journal entry to record the year-end adjusting entry for the bad debt expense.

Question 2: Describe the importance of separating income from continuing operations from other, nonrecurring items.

Accounts Receivable $1,320,000 Allowance for Doubtful Accounts $(320,000) Net Realizable Value $1,000,000

Explanation / Answer

Journal entry :

(1320000+21000000-9900000-51000)*4%-(320000-51000) = 225760

Date account and explanation debit credit Bad debt expense 225760 Allowance for doubtful accounts 225760 (To record adjusting entry)

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