Providing for Doubtful AccountsAt the end of the current year, the accounts receivable account has a debit balance of $1,014,000 and sales for the year total $11,490,000.The allowance account before adjustment has a credit balance of $13,700. Bad debt expense is estimated at 1/2 of 1% of sales.The allowance account before adjustment has a credit balance of $13,700. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $43,800.The allowance account before adjustment has a debit balance of $5,200. Bad debt expense is estimated at 1/4 of 1% of sales.The allowance account before adjustment has a debit balance of $5,200. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $43,200.Determine the amount of the adjusting entry to provide for doubtful accounts under each of the assumptions (a through d) listed above.a.$b.$c.$d.$

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Asked Oct 4, 2019
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Providing for Doubtful Accounts

At the end of the current year, the accounts receivable account has a debit balance of $1,014,000 and sales for the year total $11,490,000.

  1. The allowance account before adjustment has a credit balance of $13,700. Bad debt expense is estimated at 1/2 of 1% of sales.
  2. The allowance account before adjustment has a credit balance of $13,700. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $43,800.
  3. The allowance account before adjustment has a debit balance of $5,200. Bad debt expense is estimated at 1/4 of 1% of sales.
  4. The allowance account before adjustment has a debit balance of $5,200. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $43,200.

Determine the amount of the adjusting entry to provide for doubtful accounts under each of the assumptions (a through d) listed above.

a. $
b. $
c. $
d. $
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Expert Answer

Step 1

Accounts Receivable Balance = $1,014,000 and Sales = $11,490,000

Case 1

Allowance balance before adjustment is $13,700 credit, Bad debts is 0.5% of Sales

Bad debt expense = 11490000*0.5% = $57,450

The amount for adjustment entry would be ($57,450 – $13,700)= $43,750

The adjustment entry would be

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Journal entry in the books of . Ref Debit Particulars Bad Debt Expense A/c Credit Date 43750 Dr To Allowance for Doubtful Debt A/c 43750

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Step 2

Case 2

Allowance balance before adjustment is $13,700 credit, doubtful collection as per aging schedule is $43,800

The adjustment entry would be $30,100 (i.e.  $43,800 – $13,700)

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Journal entry in the books of . Ref Debit Particulars Credit Date Bad Debt Expense A/c Dr 30100 To Allowance for Doubtful Debt A/c 30100

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Step 3

Case 3

Allowance balance before adjustment is $5,200 Debit, Bad debts is 0.25%  of Sales

Bad debt expe...

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Journal entry in the books of . Ref Debit Particulars Credit Date Bad Debt Expense A/c Dr 28725 To Allowance for Doubtful Debt A/c 28725

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