PROBLEM 3 The trial balance before adjustment of Risen Company reports the following balances Cr. Dr. P150,000 Accounts receivable Allowance for doubtful accounts Sales (all on credit) Sales returns and allowances P 2,500 850,000 40,000 Instructions (a) Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be (1) 6% of gross accounts receivable and (2) 1% of net sales. "b) Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of P2,500 instead of a credit balance. How will this difference affect the jounal entries in part (a)?

PROBLEM 3 The trial balance before adjustment of Risen Company reports the following balances Cr. Dr. P150,000 Accounts receivable Allowance for doubtful accounts Sales (all on credit) Sales returns and allowances P 2,500 850,000 40,000 Instructions (a) Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be (1) 6% of gross accounts receivable and (2) 1% of net sales. "b) Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of P2,500 instead of a credit balance. How will this difference affect the jounal entries in part (a)?

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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Age of Accounts Balance, June 30 Estimated Percentage Uncollectible 1-30 days $130,000 2.00% 31-60 days 70,000 5.00% 61-90 days 32,500 20.00% Over 90 days 3,000 50.00% If the opening balance of Allowance for Doubtful accounts is $7,050, the entries to record estimated uncollectible receivables this year will be: Select one: a. Bad debt expense $7,050 Allowance for doubtful accounts $7,050 b. Allowance for doubtful accounts $14,100 Account receivable $14,100 c. Bad debt expense $14,100 Allowance for doubtful accounts $14,100 d. Account receivable $7,100 Bad debt expense $7,100
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