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Fundamental Accounting Principles

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.

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