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    Fundamental Accounting Principles

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    E1-2 The ledger of Salizar Company at the end of the current year shows Accounts Receivable
    $110,000, Sales $840,000, and Sales Returns and Allowances $40,000.

    Instructions Using Microsoft Excel
    (a) If Allowance for Doubtful Accounts has a credit balance of $2,500 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.

    (b) If Allowance for Doubtful Accounts has a debit balance of $500 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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    Solution Preview

    Hi there,
    <br>
    <br>Here are your entries:
    <br>
    <br>A)
    <br>Sales = 840,000
    <br>Returns = 40,000
    <br>Net Sales = 800,000
    <br>1% = 8,000
    <br>
    <br>A/R Balance = 110,000
    <br>10% = 11,000
    <br>
    <br>There was already a 2,500 credit balance in the account. We need to show at 12/31 that there is a balance of 10,500 (2,500 + 8,000) or 13,600 (2,500 + ...

    Solution Summary

    This question involves the fundamentals of accounting

    $2.19

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