Elburn Company - Adjusting Entries
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Bad Debts Expenses. See attached file for full problem description.
E9-2 The ledger of Elburn Company at the end of the current year shows Accounts Receivable $110,000, Sales $840,000, and Sales Returns and Allowances $28,000.
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Solution Summary
This solution is comprised of a detailed explanation to prepare the adjusting entries for Elburn Company's accounting transactions.
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Please see the attached file.
E9-2 The ledger of Elburn Company at the end of the current year shows Accounts Receivable $110,000, Sales $840,000, and Sales Returns and Allowances $28,000.
Instructions
(a) If Elburn uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Elburn determines that Copp's $1,400 balance is uncollectible.
Allowance for Doubtful Accounts $1,400
Accounts Receivable $1,400
The direct write-off is a method of accounting for bad debts that records the loss from an uncollectible account receivable at the time it is determined to be uncollectible. Therefore, we need to debit the allowance for Doubtful Accounts and credit accounts receivable for the amount that is uncollectible.
(b) If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial ...
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