Percentage of Credit Sales Clarissa Company has credit sales of $550,000 during

Question

Percentage of Credit Sales

Clarissa Company has credit sales of $550,000 during 2019 and estimates at the end of 2019 that 2.5% of these credit sales will eventually default. Also, during 2019 a customer defaults on a $777 balance related to goods purchased in 2018. Prior to the write-off for the $777 default, Clarissa's accounts receivable and allowance for doubtful accounts balances were $402,000 and $129 (credit), respectively.

Required:

1.  Prepare the journal entry to record the defaulted account.

Accounts Receivable ?

Prepare the adjusting entry to record the bad debt expense for 2019.

Accounts Receivable ?

Prepare the adjusting entry to record the bad debt expense for 2019.

Explanation / Answer

Accounting titles & Explanations Debit Credit Allowance for doubtful accounts 777 Account receivable 777 Bad debts expense 13750 Allowance for doubtful accounts 13,750 (550,000*2.5%)

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