ObLO 8-210-8-2A-BOLE8-3 Recording, Reporting, and Evaluating a Bad Debt Estimate Using the Percentage of CreditSales Methodnga 105During the year ended December 31, 2021, Kelly's Camera Shop had sales revenue of $170,000,of which $85,000 was on credit. At the start of 2021, Accounts Receivable showed a $10,000 debitbalance and the Allowance for Doubtful Accounts showed a $600 credit balance. Collections ofaccounts receivable during 2021 amounted to $68,000.Data during 2021 follow:a.b.On December 10, a customer balance of $1,500 from a prior year was determined to be uncol-lectible, so it was written off.DesthomA betelumu.A1.2.On December 31, a decision was made to continue the accounting policy of basing estimatedbad debt losses on 2 percent of credit sales for the year.Required:Give the required journal entries for the two events in December.inomialsShow how the amounts related to Accounts Receivable and Bad Debt Expense would bereported on the balance sheet and income statement for 2021.sold of $150,000 for3. On the basis of the data available, does the 2 percent rate appear to be reasonable? Explain.

Answered: 2 E8-3 Recording, Reporting, and…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 5EA: Millennium Associates records bad debt using the allowance, income statement method. They recorded...

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ObLO 8-2
10-8-2
A-BOL
E8-3 Recording, Reporting, and Evaluating a Bad Debt Estimate Using the Percentage of Credit
Sales Method
nga 105
During the year ended December 31, 2021, Kelly's Camera Shop had sales revenue of $170,000,
of which $85,000 was on credit. At the start of 2021, Accounts Receivable showed a $10,000 debit
balance and the Allowance for Doubtful Accounts showed a $600 credit balance. Collections of
accounts receivable during 2021 amounted to $68,000.
Data during 2021 follow:
a.
b.
On December 10, a customer balance of $1,500 from a prior year was determined to be uncol-
lectible, so it was written off.
DesthomA betelumu.A
1.
2.
On December 31, a decision was made to continue the accounting policy of basing estimated
bad debt losses on 2 percent of credit sales for the year.
Required:
Give the required journal entries for the two events in December.
inomials
Show how the amounts related to Accounts Receivable and Bad Debt Expense would be
reported on the balance sheet and income statement for 2021.
sold of $150,000 for
3. On the basis of the data available, does the 2 percent rate appear to be reasonable? Explain.

Expert Solution

Step 1

Journal Entry :- The act of logging any transaction, whether or not it is an economic one, is known as a journal entry. Transactions are recorded in an accounting journal that shows the debit and credit balances of a company. The journal entry contains multiple records, each of which is either a debit or a credit. The purpose of preparing the journal entry to segregate the transaction which are incurred to the debit and credit basis. Debit all expenses related transaction and credit all income related transaction.

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