32. The following information was abstracted from the 2016 financial statements
ID: 2579017 • Letter: 3
Question
32. The following information was abstracted from the 2016 financial statements of Jennings Company:
Sales (cash and credit) ...............................................
$747,000
*
Accounts Receivable, December 31, 2016 ..............
128,000
Allowance for Doubtful Accounts .....................
1,000
debit balance
Sales discounts .....................................
18,000
*
Sales returns .......................................
12,400
*
*30% of sales are credit sales ........................
*Sales discounts and returns should be deducted to determine net sales.
a. Prepare the adjusting entry for doubtful accounts expense under each of the following assumptions:
(1)
5 percent of current accounts receivable are uncollectible, (remember the debit balance of $1,000).
(2)
3 percent of credit sales are uncollectible.
(3) Joe Smith a customer with a balance of $1,200 is bankrupt and the auditor informs you to write off the account as a bad debt.
Sales (cash and credit) ...............................................
$747,000
*
Accounts Receivable, December 31, 2016 ..............
128,000
Allowance for Doubtful Accounts .....................
1,000
debit balance
Sales discounts .....................................
18,000
*
Sales returns .......................................
12,400
*
*30% of sales are credit sales ........................
*Sales discounts and returns should be deducted to determine net sales.
Explanation / Answer
1. Allowance for doubtful account balance showing a debit balance. so it will add to estimated allowance to get baddebt expense.
Baddebt expenses ($128,000*5%)+1,000) $ 7,400 Allowance for doubtful accounts $ 7,400Related Questions
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