Journal entries for estimated bad debts and allowance
Not what you're looking for?
Please explain how to prepare these entries:
Entries for bad debt expense
The trial balance before adjustment of Suarez Company reports the following balances:
Dr. Cr.
Accounts receivable $100,000
Allowance for doubtful accounts $2,500
Sales (all on credit) 750,000
Sales returns and allowances 40,000
Instructions
(a) Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be (1) 6% of gross accounts receivable and (2) 1% of net sales.
(b) Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $2,500 instead of a credit balance. How will this difference affect the journal entries in part (a)?
Purchase this Solution
Solution Summary
The solution explains journal entries for estimated bad debts and allowance
Solution Preview
(a)(1) In the percentage of accounts receivable method, the total value in the allowance account after the entry should be equal to the percentage of receivable amount that is calculated. In this method we also consider the current balance in the allowance account and accordingly calculate the amount of bad debt expense
Gross Accounts Receivable = 100,000
6% of ...
Purchase this Solution
Free BrainMass Quizzes
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Introduction to Finance
This quiz test introductory finance topics.
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Social Media: Pinterest
This quiz introduces basic concepts of Pinterest social media