Answer:
Explanation:
The journal entries are shown below:
a. Bad debt expense A/c Dr $4,500
To Allowance for doubtful debts $4,500
(Being bad debt expense is recorded)
The computation of the bad debt expense is shown below:
= Credit sales × estimated percentage given
= $300,000 × 1.5%
= $4,500
b. Bad debt expense A/c Dr $6,000
To Allowance for doubtful debts $6,000
(Being bad debt expense is recorded)
The computation of the bad debt expense is shown below:
= (Cash sales + Credit sales) × estimated percentage given
= ($900,000 + $300,000) × 0.5%
= $6,000
c. Bad debt expense A/c Dr $12,500
To Allowance for doubtful debts $12,500
(Being bad debt expense is recorded)
The computation of the bad debt expense is shown below:
= Allowance for doubtful accounts + (Accounts receivable × estimated percentage given
)
= $5,000 + ($125,000 × 6%)
= $5,000 + $7,500
= $12,500
