Explore BrainMass
Share

Allowance for Doubtful Accounts

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

Please help me understand this problem. I do not understand the mythology when talking about Accounts Receivable and the Allowance for Doubtful Accounts.

On December 31, of the current year, a company's unadjusted trial balance revealed the following: Accounts receivable of $185,600; Sales Revenue of $1,280,000; (75% were on credit), and Allowance for Doubtful Accounts of $1,600 (credit balance). Assume that this company's bad debts are estimated and recorded as 1.5% of credit sales.

1. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the balance sheet after adjustment.

2. Prepare the entry to write off a $1,500 account receivable on January 1 of the next year.

3. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the balance sheet immediately after writing off the account in part 2.

© BrainMass Inc. brainmass.com March 21, 2019, 5:17 pm ad1c9bdddf
https://brainmass.com/business/allowance-method/allowance-for-doubtful-accounts-215664

Attachments

Solution Preview

Please see the attached file

On December 31, of the current year, a company's unadjusted trial balance revealed the following: Accounts receivable of $185,600; Sales Revenue of $1,280,000; (75% were on credit), and Allowance for Doubtful Accounts of $1,600 (credit balance). Assume that this company's bad debts are estimated and recorded as 1.5% of credit sales.

1. Show how Accounts Receivable and the Allowance for Doubtful Accounts ...

Solution Summary

The solution explains the journal entries relating to allowance for doubtful accounts

$2.19