3. The following information was gathered to help prepare t he adjusting entry f

Question

3. The following information was gathered to help prepare t he adjusting entry for Phoebe's Flower Shop for 2018. This financial information is before any of the bad debt expense adjustments. Debit Credit 135,000 Accounts Reccivable, 12/31/18 Allowance for Uncollectible Accounts, 12/31/18 Sales (all on credit)12/31/18 Sales Returns and Allowances, 12/31/18 1.750 428,000 10.500 Required (each situation is independent of the others): a. Prepare the appropriate journal entry to record the estimated bad debt expense for Phoebe's Flower Shop assuming bad debts are assumed to be 2.25% of net sales (income statement approach). b. Prepare the appropriate journal entry to record the estimated bad debt expense for Phoebe's Flower Shop assuming bad debts are assumed to be 3.5% of gross accounts receivable (balance sheet approach). c. Prepare the appropriate journal entry to record the estimated bad debt expense for Phoebe's Flower Shop assuming the same facts in part b except that Phoebe's Allowance for Uncollectible Accounts account has a debit balance of S1,350 d. Calculate the net realizable value in the Accounts Receivable assuming the same facts as in part c ate Account

Explanation / Answer

a. Date Account Description Debit Credit Bed Debts Dr. 9393.75 Allowance for Uncollectible Cr. 1750 Accounts receivable Cr. 7643.75 Profit & Loss a/c Dr. 7643.75 Bad debts Cr. 7643.75 b. Date Account Description Debit Credit Bed Debts Dr. 4725 Allowance for Uncollectible Cr. 1750 Accounts receivable Cr. 2975 Profit & Loss a/c Dr. 2975 Bad debts Cr. 2975 c. Date Account Description Debit Credit Bed Debts Dr. 4725 Allowance for Uncollectible Cr. 1350 Accounts receivable Cr. 3375 Profit & Loss a/c Dr. 3375 Bad debts Cr. 3375 d. Account Receivable 135000 Less- Allowance for Uncollectible 1350 Less- Bed debts Charged to Profit & Loss 3375 Net Realizable Value 130275

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