Answer:
Providing for Doubtful Accounts
The amount of the adjusting entry to provide for doubtful accounts are:
a) = $68,825
b) = $28,600
c) = $36,275
d) = $83,700
Explanation:
a) Data and Calculations:
Accounts receivable balance = $962,000
Sales for the year = $10,910,000
Allowance account before adjustment = $13,000 (credit)
Estimated Bad Debt Expense = 3/4 of 1% of Sales
= 3/4 * 1% * $10,910,000
= $81,825
Bad Debt Expense = $68,825 ($81,825 - $13,000)
b) Allowance account before adjustment = $13,000 (credit)
Estimated doubtful accounts = $41,600
Bad Debts Expense = $28,600 ($41,600 - $13,000)
c) Allowance account before adjustment = $9,000 (debit)
Estimated Bad Debt Expense = 1/4 of 1% of Sales
= 1/4 * 1% * $10,910,000
= $27,275
Bad Debt Expense = $36,275 ($27,275 + $9,000)
d) Allowance account before adjustment = $9,000 (debit)
Estimated doubtful accounts = $74,700
Bad Debts Expense = $83,700 ($74,700 + $9,000)
The adjusting entry is:
Debit Bad Debts Expense
Credit Allowance for Doubtful Accounts
With the amount of the adjusting entry in each case
