Question

Questions 9 a) ABC Company's ledger at the end of the current year shows Accounts Receivable of $150,000. If Allowance for Doubtful Accounts has a debit balance of $3,000 in the trial balance and bad debts are expected to be 6% of accounts receivable, journalize the adjusting entry for the end of the period. b) Sheba Company estimates that 1% of net credit sales will become uncollectible. Sales are $500,000, sales returns and allowances are $30,000, and the allowance for doubtful accounts has a $6,000 credit balance. journalize the adjusting entry for the end of the period: . C) On October 1, Belton Bicycle Store had an inventory of 20 bicycles at a cost of $200 each. During the month of October, the following transactions occurred. Oct. 4 6 7 13 14 Purchased 25 bicycles at a cost of $200 each from Kuhn Bicycle Company, terms 2/10, n/30. Sold 15 bicycles to Team America for $300 each, terms 2/10, 1/30. Returned 2 defective bicycles to Kuhn Bicycle Company Team America returned 1 defective bicycle Paid Kuhn Bicycle Company in full, less discount. Instructions Prepare the journal entries to record the transactions assuming the company uses a perpetual inventory system.

Answer 1

Requirement A

Date	Particulars	Amount	Narration
XXXX	Dr. Bad debts Expense	6,000.00	To record 6% expected bad debts for Account receivables
XXXX	Cr. Allowance for Doubtful account	-6,000.00	To record 6% expected bad debts for Account receivables

Workings :

Particulars	Amount
Account receivable	1,50,000.00
Less 6% expected bad debts	-9,000.00
	1,41,000.00

Particulars	Amount
6% expected bad debts	9,000.00
Opening Bad debts balance	-3,000.00
Current year bad debts	6,000.00

Requirement B

Date	Particulars	Amount	Narration
XXXX	Dr. Bad Debt Expense	4,700.00	To record estimated uncollectible amount(470000*1%)
XXXX	Cr.Allowance for Doubtful Account	-4,700.00	To record estimated uncollectible amount(470000*1%)

Workings :

Particulars	Amount
Sales	5,00,000.00
Sales Returns	-30,000.00
Total Sales	4,70,000.00

Particulars	Amount
Total Sales	4,70,000.00
1% Net Credit sales	4,700.00

Requirement C

Date	Particulars	Amount	Narration
Oct-04	Dr.Purchase account	5,000.00	Purchased goods from Kuhn Bicycle Company
Oct-04	Cr.Kuhn Bicycle Company account	-5,000.00	Purchased goods from Kuhn Bicycle Company
Oct-06	Dr. Team America account	4,500.00	Sold good to Team America
Oct-06	Cr. Sales account	-4,500.00	Sold good to Team America
Oct-07	Dr.Kuhn Bicycle Company account	400.00	Returned defective bicycles to Kuhn Bicycle Company
Oct-07	Cr.Purchase account	-400.00	Returned defective bicycles to Kuhn Bicycle Company
Oct-13	Dr. Sales account	300.00	Sales return( Team america returned defective bicycle
Oct-13	Cr. Team America account	-300.00	Sales return( Team america returned defective bicycle
Oct-14	Dr.Kuhn Bicycle Company account	5,000.00	Paid Kuhn Bicycle Company in full, less discount
Oct-14	Cr. Cash and bank account	-4,900.00	Paid Kuhn Bicycle Company in full, less discount
Oct-14	Cr. Discount account	-100.00	Paid Kuhn Bicycle Company in full, less discount (25*200*2%)

Working Note
Purchases (25*200)	5,000.00
Sales(15*300)	4,500.00
Purchase returns(2*200)	400.00
Sales returns (1*300)	300.00
Discount(25*200*2%)	100.00