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lorasvet [3.4K]
3 years ago
15

Oriole Company has outstanding accounts receivable totaling $1.26 million as of December 31 and sales on credit during the year

of $6.24 million. There is also a debit balance of $5900 in the allowance for doubtful accounts. If the company estimates that 2% of its accounts receivable will be uncollectible, what will be the balance in the allowance for doubtful accounts after the year-end adjustment to record bad debt expense?
Business
2 answers:
Pie3 years ago
8 0

Answer:

$25,200

Explanation:

Allowance for doubtful accounts should have a credit balance since it is a contra asset account that reduces the value or accounts receivable. In this case, the account has a debit balance, so the adjusting entry should be:

December 31, adjusting entry allowance for doubtful accounts:

Dr Bad debt expense 31,100

    Cr Allowance for doubtful accounts 31,100

that way the final balance of allowance for doubtful accounts = $31,100 - $5,900 = $25,200

skelet666 [1.2K]3 years ago
5 0

Answer:

$19,600.

Explanation:

The prudence concept of Accounting, also known as Conservatism Principle, requires management to record loss if there is an expectation to incur it. This principle gave birth to the concept of Bad Debts. Companies estimate the amount of Accounts Receivable that will not be collectible by Aging. An expense is recorded in the Statement of Profit or Loss by the calculated amount, whereas a credit entry to match the debit is charged to Allowance for Doubtful Account which is a contra-asset account to Accounts Receivable.

Oriole has estimated that $25,500 (2% of 1.26 million) of receivables will be uncollectible. A debit entry for Bad Debts is recorded in P&L and a credit to it will be charged to Allowance for Doubtful Account. This contra-asset account already has a opening debit balance of $5,900, the balance after adjustment for bad debts will be $19,600 (25,500 - 5,900).

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The following selected transactions were completed during July of the current year: July 1 Billed customers for fees earned, $72
mixer [17]

Answer:

a. Journal Entries:

July 1 Debit Accounts receivable, $72,960

Credit Fees Earned $72,960

To record fees earned.

July 4 Debit Supplies $1,900

Credit Accounts payable $1,900

To record supplies purchased on account.

July 8 Debit Cash $65,960

Credit Accounts receivable $65,960

To record cash received from customers on account.

July 11 Debit Accounts payable $840

Credit Cash $840

To record payment to creditors on account.

Cash

Date     Account Titles            Debit     Credit

July 8  Accounts receivable $65,960

July 11 Accounts payable                      $840

Supplies

Date     Account Titles            Debit     Credit

July 4   Accounts payable    $1,900

Accounts Receivable

Date     Account Titles            Debit     Credit

July 1   Fees Earned           $72,960

July 8  Cash                                      $65,960

Accounts Payable

Date     Account Titles            Debit     Credit

July 4   Supplies                                   $1,900

July 11   Cash                          $840

Fees Earned

Date     Account Titles            Debit     Credit

July 1    Accounts receivable            $72,960

c. If the unadjusted trial balance on July 31 shows a credit balance for Accounts Receivable, it means that an error has occurred, unless the cash received from customers on account exceeds the debit balance on the Accounts receivable.  This will mean that some customers paid in advance for services not yet rendered.  This credit balance needs to be transferred to the Deferred Revenue account.

Explanation:

a) Data and Calculations:

July 1 Accounts receivable, $72,960 Fees Earned $72,960

July 4 Supplies $1,900 Accounts payable $1,900

July 8 Cash $65,960 Accounts receivable $65,960

July 11 Accounts payable $840 Cash $840

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Answer:

B) that the impact of unethical actions can reach far beyond the corporation.

Explanation:

Due to Bernie's bad actions, not only did WorldCom's shareholders, clients and employees suffered, also an innocent third party suffered. The Heritage Foundation had nothing to do with Bernie (unlucky name for CEOs), but since they received money from the Sea Pines Heritage PGA golf tournament, both the foundation and the tournament will suffer from lower incomes and bad reputation. This can almost be consider a negative externality, since an innocent bystander suffers from the crooked transactions of other parties.

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Riverbed Corp provides security services. Selected transactions for Riverbed Corp are presented below. Oct. 1 Issued common stoc
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Answer:

Oct.1

Dr Cash $67,300

Cr Common stock $67,300

Oct.2 No Entry

Oct.4

Dr Rent expense $2,000

Cr Cash $2,000

Oct.7

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Cr Cash $4100

Cr Accounts payable $14,300

Oct.8

Do Advertising expense $500

Cr Cash $500

Oct.10

Dr Repair expense $400

Cr Accounts payable $400

Oct.12

Dr Accounts receivable $3,300

Cr Service revenue $3,300

Oct.16

Dr Supplies $420

Cr Accounts payable $420

[Being To record purchase of supplies on account]

Oct.21

Dr Accounts payable $14,300

Cr Cash $14,300

($18,400-$4,100)

Oct.24

Dr Utilities expense $151

Cr Cash $151

Oct.27

Dr Cash $3,300

Cr Accounts receivable $3,300

Oct.31

Dr Salaries and wages expense $5,200

Cr Cash $5,200

Explanation:

Preparation of journal entries

Oct.1

Dr Cash $67,300

Cr Common stock $67,300

[Being To record investment in business]

Oct.2 No Entry

Oct.4

Dr Rent expense $2,000

Cr Cash $2,000

[Being To record payment of rent]

Oct.7

Dr Equipment $18,400

Cr Cash $4100

Cr Accounts payable $14,300

($18,400-$4,100)

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Oct.8

Do Advertising expense $500

Cr Cash $500

[Being To record payment of advertising expense]

Oct.10

Dr Repair expense $400

Cr Accounts payable $400

[Being To record repair expense]

Oct.12

Dr Accounts receivable $3,300

Cr Service revenue $3,300

[Being To record services performed on account]

Oct.16

Dr Supplies $420

Cr Accounts payable $420

[Being To record purchase of supplies on account]

Oct.21

Dr Accounts payable $14,300

Cr Cash $14,300

($18,400-$4,100)

[Being To record cash paid for accounts payable]

Oct.24

Dr Utilities expense $151

Cr Cash $151

[Being To record payment of utilities]

Oct.27

Dr Cash $3,300

Cr Accounts receivable $3,300

[Being To record collections from customers]

Oct.31

Dr Salaries and wages expense $5,200

Cr Cash $5,200

[Being To record payment of salaries and wages expense]

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