Purchase Solution

Journal Entries for the bad debt amounts using two methods

Not what you're looking for?

Ask Custom Question

Please help explain how to understand this problem.

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).

Prepare the adjusting journal entry to record the estimate for bad debts assuming:

1. 6% of the accounts receivable balance is assumed to be uncollectible.
2. Bad debts expense is estimated to be 1.5% of credit sales.

Purchase this Solution

Solution Summary

The solution shows the entries under both methods together with an explanation and a link to another source of information.

Solution Preview

Accounts Receivable $185,600
Total Sales ($1,280,000)
Credit Sales ($960,000)
Allowance account ($1,600)

1. The total in the allowance account should be 185,600 x 6% of accounts receivable = ...

Purchase this Solution


Free BrainMass Quizzes
Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Basics of corporate finance

These questions will test you on your knowledge of finance.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Motivation

This tests some key elements of major motivation theories.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.