Given this information before adjustments Accounts Receivable 160,000 Allowance
ID: 2442633 • Letter: G
Question
Given this information before adjustments
Accounts Receivable
160,000
Allowance for Doubtful Accounts
2,000
Sales (all on credit)
800,000
Sales returns and Allowances
50,000
Prepare journal entries to record bad debt expense assuming Sandel Company estimates bad debt at A) 1%$ of net sales and B) 5% of Accounts Receivable
Answers I got were
Bad Debt Expense
8,000
Allowance for Doubtful Accounts
8,000
Bad Debt Expense
8,000
Allowance for Doubtful Accounts
8,000
Is this how you do it? If not can someone please explain?
Accounts Receivable
160,000
Allowance for Doubtful Accounts
2,000
Sales (all on credit)
800,000
Sales returns and Allowances
50,000
Explanation / Answer
Looks good except on A) it should be 7,500 because you are using net and not gross sales on B) you only need to add $6K to allowance for doubtful accounts since it already has $2K.
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