The ledger of Garcia Company at the end of the current yearshows Accounts Receiv

Question

The ledger of Garcia Company at the end of the current yearshows Accounts Receivable $96,000; Credit Sales $780,000; and SalesReturns and Allowances $40,000.

If Garcia uses the direct write-off method to account foruncollectible accounts, journalize the adjusting entry at December31, assuming Garcia determines that Allied's $900 balance isuncollectible.

If Allowance for Doubtful Accounts has a credit balance of$1,100 in the trial balance, journalize the adjusting entry atDecember 31, assuming bad debts are expected to be 10% of accountsreceivable.

If Allowance for Doubtful Accounts has a debit balance of $500in the trial balance, journalize the adjusting entry at December31, assuming bad debts are expected to be 8% of accountsreceivable.

Explanation / Answer

31-Dec Bad Debt Expense 900.00      Accounts Receivable 900.00 31-Dec Bad Debts Expenses 8,500.00      Allowance for doubtful accounts 8,500.00 31-Dec Bad Debts Expenses 8,180.00      Allowance for doubtful accounts 8,180.00

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