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. Allowance for Doubtful Accounts Accounts Receivable Record write-off of defaulted account 2. Prepare the adjusting entry to record the bad debt expense for 2019. Bad Debt Expense Allowance for Doubtful Accounts Record adjusting entry for bad debt expense estimate
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. Allowance for Doubtful Accounts Accounts Receivable Record write-off of defaulted account 2. Prepare the adjusting entry to record the bad debt expense for 2019. Bad Debt Expense Allowance for Doubtful Accounts Record adjusting entry for bad debt expense estimate
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter5: Sales And Receivables
Section: Chapter Questions
Problem 43BE
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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
| Allowance for Doubtful Accounts | |||
| Accounts Receivable | |||
| Record write-off of defaulted account |
2. Prepare the
| Bad Debt Expense | |||
| Allowance for Doubtful Accounts | |||
| Record adjusting entry for bad debt expense estimate |
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