Question

A trial balance before adjustment included the following:

Answer 1

The preparation of the journal entries assuming that the estimate of uncollectible accounts is as follows:

Journal Entries:

a. 4% of accounts receivable

Debit Bad Debts Expense $31,300

Credit Allowance for Doubtful Accounts $31,300

• To record the bad debts expense for the period.

b. 2% of net sales

Debit Bad Debts Expense $13,800

Credit Allowance for Doubtful Accounts $13,800

• To record the bad debts expense for the period.

Data and Calculations:

                                                      Debit         Credit

Accounts receivable                $180,000

Allowance for doubtful accounts  3,500

Sales returns and allowances    25,000

Credit Sales                                                $540,000

Net sales = $515,000 ($540,000 - $25,000)

Adjustment Analysis:

a. 4% of accounts receivable

Ending balance of Allowance for doubtful accounts = $27,800 {($180,000 - $25,000 + $540,000) x 4%}

Bad Debts Expense = $31,300 ($3,500 + $27,800)

Bad Debts Expense $31,300 Allowance for Doubtful Accounts $31,300

b. 2% of net sales

Ending balance of Allowance for doubtful accounts = $10,300 ($515,000 x 2%)

Bad Debts Expense = $13,800 ($3,500 + $10,300)

Bad Debts Expense $13,800 Allowance for Doubtful Accounts $13,800

Learn more about estimating uncollectible allowances at brainly.com/question/25654164

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