Austin Incorporated has credit sales of $1,200,000 during 2012 and estimates at

Question

Austin Incorporated has credit sales of $1,200,000 during 2012 and estimates at the end of 2012 that 196 of these credit sales will default (Austin uses the percentage-of-sales approach) During 2012 a customer defaulted on a S6,0oo balance related to goods purchased during 2011. Austin's accounts receivable and allowance for bad debts balances at the end of the year were $50,000 debit and $7,00o credit, respectively (note -the $7,0oo credit balance in the Allowance for Bad Debts account is the balance just before the adjusting entry to record 2012 bad debts expense assume that the $6,0oo write-off has already been posted to the Allowance for Bad Debts account). Prepare journal entries to record A) Write off the defaulted $6,000 balance. 8) Adjusting entry to record the bad debt expense for 2012. A) B) C) What is the net accounts receivable balance at the end of the year after the adjustments have been made?

Explanation / Answer

In the books of Austin Incorporated :

C. Net Accounts Receivable at the end of the year:

:

Transaction / Event Account Titles Debit Credit $ $ A. Allowance for Bad Debt 6,000 Accounts Receivable 6,000 B. Bad Debt Expense 12,000 Allowance for Bad Debts 12,000

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.