Question

The ledger of Larkspur, Inc. at the end of the current year shows Accounts Receivable $89,000; Credit Sales $830,000; and Sales Returns and Allowances $50,000 (a) If Larkspur uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Larkspur determines that Matisse $700 balance is uncollectible (b) If Allowance for Doubtful Account has a credit balance of $1,400 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 11% of accounts receivable (c) If Allowance for Doubtful Account has a debt balance of $500 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 9% of accounts receivable. Prepare foumal entries to record the above transactions. (Credit account titles are automatically when amount is entered. Do not indent manually) Debit Mo. Date Account Tities and Explanation (a) Dec 31 (h) Dec 31 Dec 31

Answer 1

No.	Date	Account Title and Explanation	Debit	Credit
(a)	Dec.31	Bad debt expense	$700
		Allowance for doubtful accounts		$700
(b)	Dec. 31	Bad debt expense	$8,390
		Allowance for doubtful accounts		$8,390
(c)	Dec. 31	Bad debt expense	$8,510
		Allowance for doubtful accounts		$8,510

(b)

Bad debt expense = Accounts receivable x % estimated as uncollectible - Existing credit balance of allowance fro doubtful acacounts

= 89,000 x 11% - 1,400

= $8,390

(c)

Bad debt expense = Accounts receivable x % estimated as uncollectible + Existing debit balance of allowance fro doubtful acacounts

= 89,000 x 9% + 500

= 8,010+500

= $8,510

Kindly comment if you need further assistance. Thanks‼!

Answer 2

The first entry (a) would be a debit to Bad Debit Expense and credit to Accounts Receivable