Need Help with this one Santana Rey, owner of Business Solutions, realizes that
ID: 2529171 • Letter: N
Question
Need Help with this one
Santana Rey, owner of Business Solutions, realizes that she needs to begin accounting for bad debts expense. Assume that Business Solutions has total revenues of $55,000 during the first three months of 2018, and that the Accounts Receivable balance on March 31, 2018, is $22,767. Required 1a. Prepare the adjusting entry needed for Business Solutions to recognize bad debts expense, which are estimated to be 1% of total revenues on March 31, 2018 (assume a zero unadjusted balance in the Allowance for Doubtful Accounts at March 31) 1b. Prepare the adjusting entry needed for Business Solutions to recognize bad debts expense, which are estimated to be 2% of accounts receivable on March 31, 2018 (assume a zero unadjusted balance in the Allowance for Doubtful Accounts at March 31). 2. Assume that Business Solutions' Accounts Receivable balance at June 30, 2018, is $20,650 and that one account of $80 has been written off against the Allowance for Doubtful Accounts since March 31, 2018. (Assume S. Rey uses the method prescribed in part 1b, and recorded the Allowance balance at March 31, 2018 as is part 1b.) What adjusting journal entry must be made to recognize bad debts expense on June 30, 2018?Explanation / Answer
Answer
Total Revenue
$ 55,000.00
1% of above
$ 550.00
Date
Accounts titles
Debit
Credit
Mar-31
Bad Debt Expense
$ 550.00
Allowance for Doubtful accounts
$ 550.00
(uncollectible estimate recorded)
Accounts receivable balance on 31 Mar
$ 22,767.00
2% of above
$ 455.00
Date
Accounts titles
Debit
Credit
Mar-31
Bad Debt Expense
$ 455.00
Allowance for Doubtful accounts
$ 455.00
(uncollectible estimate recorded)
Accounts receivable balance on 31 Mar
$ 20,650.00
2% of above
$ 413.00
Allowance for doubtful account balance on 31 Mar
$ 455.00
(-) Written off amount
$ 80.00
Unadjusted balance
$ 375.00
Adjusted balance required
$ 413.00
Account to be credited by
$ 38.00
Date
Accounts titles
Debit
Credit
Jun-30
Bad Debt Expense
$ 38.00
Allowance for Doubtful accounts
$ 38.00
(uncollectible estimate recorded)
Total Revenue
$ 55,000.00
1% of above
$ 550.00
Date
Accounts titles
Debit
Credit
Mar-31
Bad Debt Expense
$ 550.00
Allowance for Doubtful accounts
$ 550.00
(uncollectible estimate recorded)
Accounts receivable balance on 31 Mar
$ 22,767.00
2% of above
$ 455.00
Date
Accounts titles
Debit
Credit
Mar-31
Bad Debt Expense
$ 455.00
Allowance for Doubtful accounts
$ 455.00
(uncollectible estimate recorded)
Accounts receivable balance on 31 Mar
$ 20,650.00
2% of above
$ 413.00
Allowance for doubtful account balance on 31 Mar
$ 455.00
(-) Written off amount
$ 80.00
Unadjusted balance
$ 375.00
Adjusted balance required
$ 413.00
Account to be credited by
$ 38.00
Date
Accounts titles
Debit
Credit
Jun-30
Bad Debt Expense
$ 38.00
Allowance for Doubtful accounts
$ 38.00
(uncollectible estimate recorded)
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