Percentage of Credit Sales Clarissa Company has credit sales of $550,000 during 2019 and estimates at the end of 2019 that 2.5% of these credit sales will eventually default. Also, during 2019 a customer defaults on a $775 balance related to goods purchased in 2018. Prior to the write-off for the $775 default, Clarissa’s accounts receivable and allowance for doubtful accounts balances were $402,000 and $129 (credit), respectively. Required: 1. Prepare the journal entry to record the defaulted account. 2. Prepare the adjusting entry to record the bad debt expense for 2019.

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881
BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

Solutions

Chapter
Section
Chapter 5, Problem 25CE
Textbook Problem

Percentage of Credit Sales

Clarissa Company has credit sales of $550,000 during 2019 and estimates at the end of 2019 that 2.5% of these credit sales will eventually default. Also, during 2019 a customer defaults on a $775 balance related to goods purchased in 2018. Prior to the write-off for the $775 default, Clarissa’s accounts receivable and allowance for doubtful accounts balances were $402,000 and $129 (credit), respectively.

Required:

1. Prepare the journal entry to record the defaulted account.

2. Prepare the adjusting entry to record the bad debt expense for 2019.

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Chapter 5 Solutions

Cornerstones of Financial Accounting
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