Exercise 9-6 Percent of accounts recelvable method LO P3 At each calendar year-e

Question

Exercise 9-6 Percent of accounts recelvable method LO P3 At each calendar year-end, Mazie Supply Co. uses the percent of accounts receivable method to estimate bad debts. On December 31, 2017, it has outstanding accounts receivable of $63,000, and it estimates that 6% will be uncollectible. Prepare the adjusting entry to record bad debts expense for year 2017 under the assumption that the Allowance for Doubtful Accounts has: (a) a $1,071 credit balance before the adjustment. (b) a $315 debit balance before the adjustment. View Journal entry worksheet 2 Prepare the adjusting entry to record bad debts expense for year 2017 under K Prev 4 of 6 Next > 21

Explanation / Answer

CALCULATION OF THE BAD DEBT PROVISION AMOUNT Outstanding in the Account Receivable Account = $                  63,000 Expected to be uncollectable is 6% = $                     3,780 Case 1:        = $ 1,071 Credit Balance = Expectd Bad Debts = $                     3,780 Less : Already credit available = $                     1,071 New Bad Debts expenses book $                     2,709 Case 2:        = $ 315 Debit Balance = Expectd Bad Debts = $                     3,780 Add: Debit Balance $                        315 Total Bad Debts Expenses $                     4,095 Journal Entries Date Account Title and explanation Debit Credit Case 1: $ 1071 Debit Balance Ans =a) Bad Debts Expenses $                     2,709      To allownce for Dooubtfull Account $                       2,709 (To Record the provision of bad debts ) Ans =b) Bad Debts Expenses $                     4,095      To allownce for Dooubtfull Account $                       4,095 (To Record the provision of bad debts )

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