The Unadjusted Trial Balance has been prepared (provided below and also in Three
ID: 2527149 • Letter: T
Question
The Unadjusted Trial Balance has been prepared (provided below and also in ThreeBrothers worksheet.xlsx), showing only those accounts with a non-zero balance. You have gathered the following information that will be helpful in preparing any necessary adjusting entries (add any accounts necessary). Good luck!
ThreeBrothers
Unadjusted Trial Balance
Dec. 31, 2017
debit
credit
Cash
4,400,000
Accounts Receivable
22,500,000
Allowance for Bad Debts
20,000
Inventory
2,500,000
Purchases
85,832,500
Construction in Progress Inventory
36,000,000
Billings on Contract
35,000,000
PP&E
60,000,000
Accumulated Depreciation
36,000,000
Accounts Payable
18,000,000
Income Tax Payable
136,000
Common Stock
1,500,000
Retained Earnings
33,444,000
Sales Revenue
134,500,000
Sales Returns
2,017,500
NEWPROD Revenue
9,000,000
FITTRACKER Revenue
10,000,000
Cost of NEWPROD Sold
8,100,000
Cost of FITTRACKER Sold
4,500,000
General and Admin
51,750,000
TOTAL
277,600,000
277,600,000
Bad debt for Accounts Receivable: ThreeBrothers management does not expect there to be any change in the collectability of its credit sales related to its normal operations. ThreeBrothers uses the Accounts Receivable approach to estimate bad debts, and the aging schedule at 12/31/2017 is summarized below
Days outstanding % of AcctsRec Estimated % Uncollectible
0-30 days 40% 0.30%
30-60 days 35% 0.80%
60-90 days 15% 10.00%
>90 days 10% 25.00%
I need the adjusting journal entry and closing journal entry, if necessary. Thank You.
ThreeBrothers
Unadjusted Trial Balance
Dec. 31, 2017
debit
credit
Cash
4,400,000
Accounts Receivable
22,500,000
Allowance for Bad Debts
20,000
Inventory
2,500,000
Purchases
85,832,500
Construction in Progress Inventory
36,000,000
Billings on Contract
35,000,000
PP&E
60,000,000
Accumulated Depreciation
36,000,000
Accounts Payable
18,000,000
Income Tax Payable
136,000
Common Stock
1,500,000
Retained Earnings
33,444,000
Sales Revenue
134,500,000
Sales Returns
2,017,500
NEWPROD Revenue
9,000,000
FITTRACKER Revenue
10,000,000
Cost of NEWPROD Sold
8,100,000
Cost of FITTRACKER Sold
4,500,000
General and Admin
51,750,000
TOTAL
277,600,000
277,600,000
Explanation / Answer
Solution:
Journal Entries - Klugman Company Inc. Date Particulars Debit Credit 31-Dec-17 Bad debts Expense Dr ($990,000 - $20,000) $970,000.00 To Allowance for uncollectible accounts $970,000.00 (Being provision for uncollectible accounts recorded) 31-Dec-17 Income Summary Dr $970,000.00 To Bad debts expense $970,000.00 (Being bad debts expense closed to income statement)Related Questions
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