The ledger of Oriole Company at the end of the current year shows Accounts Recei

Question

The ledger of Oriole Company at the end of the current year shows Accounts Receivable $82,200; Credit Sales $835,490; and Sales Returns and Allowances $39,630.

c) If Allowance for Doubtful Accounts has a debit balance of $510 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 8% of accounts receivable.

a) If Oriole Company uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Oriole Company determines that Matisse’s $821 balance is uncollectible.

Explanation / Answer

Event Date Account Titles Debit Credit $ $ a. December 31 Bad Debt Expense 821 Accounts Receivable 821 b. December 31 Bad Debt Expense ( 82,200 x 11 % - 1,204) 7,838 Allowance for Doubtful Accounts 7,838 c. December 31 Bad Debt Expense ( 82,200 x 8 % + 510) 7,086 Allowance for Doubtful Accounts 7,086

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