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    Entries for bad debts and allowance account

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    The ledger of Elburn Company at the end of the current year shows Accounts Receivable $110,000, Sales $840,000, and Sales Returns and Allowances $28,000.

    Instructions:
    a. If Elburn uses the direct write-off method to account for uncollectable accounts, journalize the adjusting entry at December 31, assuming Elburn determines that Copp's $1,400 balance is uncollectable.
    b. If allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1% of net sales, and (2) 10% of accounts receivable.
    c. If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales, and (2) 6% of accounts receivable.

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    The ledger of Elburn Company at the end of the current year shows Accounts Receivable $110,000, Sales $840,000, and Sales Returns and Allowances $28,000.

    Instructions:
    a. If Elburn uses the direct write-off method to account for uncollectable accounts, journalize the adjusting entry at December 31, assuming Elburn determines that Copp's $1,400 balance is uncollectable.

    Under the direct write-off method the receivable is written off against bad debt expense
    Dec. 31 Bad Debts Expense........................... 1,400
    Accounts ...

    Solution Summary

    The solution explains the journal entries for bad debts and allowance account.

    $2.19

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