Flipper Company at the end of the fiscal 2014 year has the following information

ID: 2452615 • Letter: F

Question

Flipper Company at the end of the fiscal 2014 year has the following information: Credit

Sales, $2,500,000 Sales Returns & Allowances $25,000 Accounts Receivable $200,000

and Allowance for Doubtful Accounts with a debit o $1,500.

Required:

a. Prepare the general journal entry to record the end of the year adjusting entry if

Flipper uses 0.5% of Net Credit Sales as the basis for determining Bad Debt Expense.

b. Prepare the general journal entry to record the end of the year adjusting entry if

Flipper uses 5% of Accounts Receivable as the basis for determining Bad Debt Expense.

Date Particulars LF Debit Credit

12/31/2014 Bad Debts Expense A/c Dr $10,875

To Allowance for Doubtful Accounts A/c $10,875

(Being Bad debt expense has recorded)

($2,500,000 - $25,000= $2,475,000 *0.5/100=$12,375 -$1,500=$10,875)

_______________________________________________________________________________________

b) Bad Debts Expense A/c Dr $10,000

To Allowance for Doubtful AccountsA/c $10,000

(Being Bad debt expense has recorded taken fromaccounts receivable)

($200,000 * 5 / 100=$10,000)

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