Aaliyah Company Adjusting Entries for Bad Debt Expense
Not what you're looking for?
At December 31, 2008, Aaliyah Company records show the following results for the calendar -year:
cash sales $ 1,591, 700
credit sales 2,389,000
In addition, its unadjusted trial balance includes the following items:
accounts receivable $ 1,630,846 debit
allowance for doubtful accounts 12,650 debit
Requirement 1:
Prepare the adjusting entry for Aaliyah Co. to recognize bad debts under each of the following independent assumptions
a.bad debt are estimate to be 2% of credit sales.
b.bad debt are estimated to be 3% of total sales.
c.an aging analysis estimates that 5% of the year-end accounts receivable are uncollectible.
Purchase this Solution
Solution Summary
At December 31, 2008, Aaliyah Company records show the following results for the calendar year:
Cash sales $ 1,591,700
Credit sales 2,389,000
In addition, its unadjusted trial balance includes the following items:
Accounts receivable $ 1,630,846 debit
Allowance for doubtful accounts 12,650 debit
Requirement 1:
Prepare the adjusting entry for Aaliyah Co. to recognize bad debts under each of the following independent assumptions
a.bad debts are estimate to be 2% of credit sales.
b.bad debts are estimated to be 3% of total sales.
c.an aging analysis estimates that 5% of the year-end accounts receivable are uncollectible.
Solution Preview
a.bad debt are estimate to be 2% of credit sales.
Under this scenario, the bad debt expense is computed as 2 percent of credit sales and the balance in the Allowance for Doubtful accounts is the beginning balance plus the bad debt expense. Thus,
Credit sales $2,389,000
Bad debt percentage x .02
Bad debt expense $ 47,780 ($2,389,000*.02)
Bad Debt Expense 47,780
Allowance for doubtful accounts 47,780
b.bad debt are estimated to be 3% of total sales.
Under this ...
Purchase this Solution
Free BrainMass Quizzes
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
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.
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
Introduction to Finance
This quiz test introductory finance topics.