Chapter 7, Problem 7QS

To determine

Journal entry:

It refers to the process of recording the data into books of accounts on continuous basis. It is a process of record keeping for every transaction by a company or a firm.

Rules of journal entry:

• Assets: Increase in asset should be debit and decrease should be credit.
• Liabilities: Increase in liabilities should be credit and decrease should be debit.
• Equity: Increase in Equity should be credit and decrease should be debit.
• Expense: Increase in expense should be debit and decrease should be credit.
• Revenue: Increase in revenue should be credit and decrease should be debit.

Percentage of Sales Method:

It refers to a method of calculating bad debt expense by a company on the basis of a percentage over net credit sales. This method defines the amount of bad debts as a percentage of net credit sales.

To prepare: Adjustment entry to record the given transaction for uncollectible.