providing for doubtful accounts Show Me How Calculator Print Item Providing for

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providing for doubtful accounts

Show Me How Calculator Print Item Providing for Doubtful Accounts At the end of the current year, the accounts receivable account has a debit balance of $740,000 and sales for the year total $8,390,000. a. The allowance account before adjustment has a credit balance of $10,000. b. The allowance account before c. The allowance account before adjustment has a debit adjustment has a credit balance of $10,000. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $32,00o balance of $7,300. Bad debt expense is estimated at 1/4 of t % of sales. d. The allowance account before adjustment t has a debit balance of $7,300. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $60,600 the adjusting entry to provide for doubtful accounts under each of the assumptions (a through d) listed above. b. d. (Pt Previous Check My Work 1 more Check My Work uses remaining

Explanation / Answer

a. $             62,925 b $             22,000 c. $             20,975 d. $             67,900 Workings When using percentage of sales to estimate bad debts ( both A and C ) in the allowance account is ignored. a. $       83,90,000 X 1% X 3/4 = $ 62,925 c. $       83,90,000 X 1% X 1/4 = $ 20,975 When using Accounts Receivable to estimate bad debt ( both B and D ) the current balance in the Allowance account is taken in to consideration. b. $             32,000 - $ 10,000 = $ 22,000 d. $             60,600 + $    7,300 = $ 67,900

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