Name________________________________ The December 31, 2016 balance sheet of Bens
ID: 2558860 • Letter: N
Question
Name________________________________
The December 31, 2016 balance sheet of Benson Company had Accounts Receivable of $450,000 and a credit balance in Allowance for Doubtful Accounts of $33,000. During 2017, the following transactions occurred:
Sales on account $1,600,000
Sales returns and allowances, $75,000
Collections from customers, $1,450,000
Accounts written off $35,000
Previously written off accounts of $6,000 were collected
(a) Journalize the 2017 transactions. Disregard any impact on inventory. (6 points)
Date
Account Titles
Debit
Credit
(b) If Benson uses the percentage of sales basis to estimate bad debts expense and anticipates 2% of the 2017 net sales to be uncollectible, what is the adjusting entry at December 31, 2017? (2 points)
Date
Account Titles
Debit
Credit
(c) If the Benson uses the percentage of receivables basis to estimate bad debts expense and determines that uncollectible accounts are expected to be 4% of the 2017 year-end balance in accounts receivable, what is the adjusting entry at December 31, 2017? Use the T accounts forms provided below for your analysis. (2 points)
Date
Account Titles
Debit
Credit
Accounts Receivable (T-Chart Below)
Allowance for Doubtful Accounts (T-chart below)
Date
Account Titles
Debit
Credit
Explanation / Answer
Answer
(a) Journalize the 2016 transactions:
B.
Percentage-of-sales basis:
C.
ACCOUNTS RECEIVABLE:
ALLOWANCE FOR DOUBTFUL ACCOUNTS :
Required balance ()=$490000*0.04 =$19600
Balance before adjustment =$6000
Adjustment required =$13600
Adjusted entry:
Date Particulars Dr Cr Accounts Receivable $1,600,000 Sales Revenue $1,600,000 (To record credit sales) Sales Returns and Allowances $75,000 Accounts Receivable $75,000 (To record credits to customers) Cash $1,450,000 Accounts Receivable (To record collection of receivables) Allowance for Doubtful Accounts $35,000 Accounts Receivable $35,000 (To write off specific accounts) Accounts Receivable $33,000 Allowance for Doubtful Accounts $33,000 (To reverse write-off of account) Cash $6,000 Accounts Receivable $6,000 (To record collection of account)Related Questions
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