During 2019, Lacee Enterprises had gross sales of $247,000. At the end of 2019, Lacee had accounts receivable of $83,000 and a credit balance of $5,600 in Allowance for Bad Debts. Lacee has used the percentage-of-gross-sales method to estimate the bad debt expense. For the past several years, the amount estimated to be uncollectible has been 3%. Instructions: 1. Using the percentage-of-gross-sales method, estimate the bad debt expense and make any necessary adjusting entries. 2. Assuming that 6% of receivables are estimated to be uncollectible and that Lacee decides to sue the percentage-of-receivables method to estimate the bad debt expense, estimate the bad debt expense and make any adjusting entries.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
During 2019, Lacee Enterprises had gross sales of $247,000. At the end of 2019, Lacee had
Instructions:
1. Using the percentage-of-gross-sales method, estimate the bad debt expense and make any necessary
2. Assuming that 6% of receivables are estimated to be uncollectible and that Lacee decides to sue the percentage-of-receivables method to estimate the bad debt expense, estimate the bad debt expense and make any adjusting entries.
Trending now
This is a popular solution!
Learn your way
Includes step-by-step video
Step by step
Solved in 3 steps
