a) The trial balance before adjustment of Jason Donohoe Company reports the following balances: Accounts receivable Allowance for doubtful accounts Sales (all on credit) Sales returns and allowances Dr. $300,000 80,000 Date Instructions (a) Prepare the entry for estimated bad debts assuming the balance sheet approach is used, and doubtful accounts are estimated to be 6% of gross accounts receivable. DR/CR Cr. (b) Prepare the entry for estimated bad debts assuming that income statement approach is used at 1% of net sales. $ 5,000 1,700,000 (c) Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $5,000 instead of a credit balance. How will this difference affect the journal entry in part (a)? Account Debit Credit

a) The trial balance before adjustment of Jason Donohoe Company reports the following balances: Accounts receivable Allowance for doubtful accounts Sales (all on credit) Sales returns and allowances Dr. $300,000 80,000 Date Instructions (a) Prepare the entry for estimated bad debts assuming the balance sheet approach is used, and doubtful accounts are estimated to be 6% of gross accounts receivable. DR/CR Cr. (b) Prepare the entry for estimated bad debts assuming that income statement approach is used at 1% of net sales. $ 5,000 1,700,000 (c) Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $5,000 instead of a credit balance. How will this difference affect the journal entry in part (a)? Account Debit Credit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases and indicate the ending balance in each case. (a) Credit balance of $200 in Allowance for Doubtful Accounts just prior to adjustment. Analysis of Accounts Receivable indicates uncollectible receivables of $8,000. (b) Credit balance of $2000 in Allowance for Doubtful Accounts just prior to adjustment. Uncollectible receivables are estimated at 2% of credit sales, which totaled $1,000,000 for the year.
Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases AND indicate the ending balance in each case. (a) Debit balance of $400 in Allowance for Doubtful Accounts just prior to adjustment. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $10,000. (b) Credit balance of $1000 in Allowance for Doubtful Accounts just prior to adjustment. Bad debt expense is estimated at 2% of credit sales, Total sales were $1,800,000 of which $400,000 were cash sales. View keyboard shortcuts EditViewInsertFormatToolsTable 12pt Paragraph
The allowance method of estimating uncollectible accounts receivable based on an analysis of receivables shows that $656 of accounts receivable are uncollectible. Allowance for Doubtful Accounts has a debit balance of $193. The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of Oa. $849 Ob. $656 Oc. $193 Od. $463
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