Chipman software recently reported the following amounts in its unadjusted trial

Question

Chipman software recently reported the following amounts in its unadjusted trial balance at its year-end:

Prepare the adjusting journal entry required for the year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Round your answers to nearest whole dollar amount.)

1. Record the adjusting entry for bad debts using percent credit sales method.

2. Record the adjusting entry for bad debts using the aging of accounts receivable method.

Assume instead that Chipman uses the aging of accounts receivable method and estimates that $79 of its Accounts Receivable will be uncollectible. Prepare the year-end adjusting journal entry for recording Bad Debt Expense. Also, assume Chipman's year-end unadjusted balance in Chipman’s Allowance for Doubtful Accounts was a debit balance of $40. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

1. Record the adjusting entry for bad debts using the aging of accounts receivable method.

If one of Chipman's main customers declared bankruptcy after year-end, what journal entry would be used to write off its $10 balance? (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Record the write-off certain customer account which is not collectible due to bankruptcy declared by the customer totaling $10.

Chipman software recently reported the following amounts in its unadjusted trial balance at its year-end:

Explanation / Answer

1 Bad debts expense 215 =43000*0.5%          Allowance for Doubtful Accounts 215 2 Bad debts expense 59 =79-20          Allowance for Doubtful Accounts 59 3 Bad debts expense 119 =79+40          Allowance for Doubtful Accounts 119 4 Allowance for Doubtful Accounts 10           Accounts Receivable 10

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