On December 31, 2016, Bruce Corporation had the following account balances relat
ID: 2781802 • Letter: O
Question
On December 31, 2016, Bruce Corporation had the following account balances related to credit sales and receivables prior to recording adjusting entries:
Accounts receivable
$168,000
Allowance for doubtful accounts
700
credit balance
Sales revenue (all credit sales)
550,000
Required:
Prepare the necessary year-end adjusting entry related to uncollectible accounts for each of the following independent assumptions:
A. An aging of accounts receivable is completed. It is estimated that $6,000 of the receivables outstanding at year-end will be uncollectible.
B. It is estimated that a provision for bad debts is required for 1% of credit sales for the year.
Accounts receivable
$168,000
Allowance for doubtful accounts
700
credit balance
Sales revenue (all credit sales)
550,000
Explanation / Answer
1) Preparation of year end Adjusting entries related to uncollectible accounts :
A) New estimated uncollectibles = $6,000
Opening balance = $700 Credit balance
Adjustment required at the year end = $6,000 - $700
= $5,300
Entry :
Bad debt Expense A/c Dr.$5,300
To Allowance for account receivable A/c Cr.$5,300
B) New estimated Provision = $5,500 *(.$550,000*1%)
Opening balance = $700 Credit balance
Adjustment required at the year end = $5,500 - $700
= $4,800
Entry :
Bad debt Expense A/c Dr.$4,800
To Allowance for account receivable A/c Cr.$4,800.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.