Gold Inc. had the following information available before adjusting journal entir

Question

Gold Inc. had the following information available before adjusting journal entires Total Sales (60% credit) $1,800,000.00 cr accounts receivable allowance 175,000.00 dr 6,200.00 dr 17·Gold estimated that 6% of credit sales are uncollectible. What is the year end journal entry? What is the net realizable value before and after the journal entry? 18.If Gold estimated 12% of Accounts Receivable to be uncollectible What is the year end journal entry? What is the net realizable value after the journal entry?

Explanation / Answer

17) Journal Entry Accounting titles & Explanations Debit Credit Bad debts expense 108000 Allowance for bad debts 108,000 (1,800,000*6%) Net realizable value before entry Accounts receivable 175,000 add allowance for bad debts 6,200 Net realizable value before entry 181,200 Net realizable value after entry Accounts receivable 175,000 less allowance for bad debts -101800 Net realizable value after entry 73,200 18) Estimated bad debts 175,000*12% 21000 Journal Entry Accounting titles & Explanations Debit Credit Bad debts expense 27200 Allowance for bad debts 27,200 (21000+6200) Net realizable value after entry Accounts receivable 175,000 less allowance for bad debts -21000 Net realizable value after entry 154,000

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