At the end of the fiscal 2013 year, Martin Realty has the following information:
ID: 2453651 • Letter: A
Question
At the end of the fiscal 2013 year, Martin Realty has the following information: Credit Sales, $1,200,000 Sales Returns & Allowances $5,000 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 Martin Realty uses 1.0% 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 Martin Realty uses 5% of Accounts Receivable as the basis for determining Bad Debt Expense.
Date
Account
Debit
Credit
Provide a definition for current liabilities.
What is the operating cycle?
Identify typical current liabilities.
Date
Account
Debit
Credit
Explanation / Answer
current liability is a present obligation of an enterprise as a result of past event and that is likely to result in outflow of resources embodying economic benefits.
2)operating cycle - It is an average periof of time required for a business to make an initial outlay of cash to produce goods ,sell goods ,receive cash from customers.
3)current liabilities -Not payable ,accounts payable ,Interest payable etc
Date Title Debit credit a Bad debt expense 11950 Allowance for doubtful account 11950 [Being bad debt expense recorded (1200000-5000)*.01] b Bad debt expense 11500 Allowance for doubtful account 11500 [being bad debt expense recorded [200000*.05] = 10000+ 1500debit balance ]Related Questions
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