During the year, Everlight has $155,000 of credit sales, collections of credit s
ID: 2601305 • Letter: D
Question
During the year, Everlight has $155,000 of credit sales, collections of credit sales of $143,000, and write-offs of $3,300. It records bad debts expense at the end of the year using the aging-of-receivables method. At the end of the year, the aging analysis shows that $1,700 is the estimate of uncollectible accounts. Before the year-end entry to adjust the bad debts expense is made, the balance in the Allowance for Bad Debts expense is(10pts) a. b. Prepare the journal entry to record the bad debts expense on December 31, 2017.(20pts) Allowance for Bad Debts account has a credit balance of $2,000 before the adjusting entry for bad debts expense. credit sales will be uncollectible for the year 2017, Net credit sales 6) The The company's management estimates that 2% of net for the year were $250,000. Prepare the journal entry to record the bad debts expense on December 31, 2017.(0ptsExplanation / Answer
a) Before the year end entry to adjust the bad debt expenses is made, the balance in Allowance for bad debts exepenses is 5000.
Beacause after the year end entry to adjust the bad debt expenses of 3300, the balance as per ageing analysis will show the balance of 1700.
b) Journal entry for Bad debt expense as on Dec 31, 2017:-
Bad Debt expenses a/c Dr. 3300
Allowance for bad debt expense a/c 3300
6) Journal entry for Bad debt expense as on Dec 31, 2017:-
Bad Debt expenses a/c Dr. 5000
Allowance for bad debt expense a/c 5000
working Notes;-
Bad debt expenses= 250000 * 2% = 5000
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