Homework Answers
Worcester company is using Allowance method of accounting for bad debts.
(1)
Bad Debt Expense = (Accounts receivable estimated as uncollectible) – Existing credit balance in allowance for doubtful accounts
= 11,750 - 2,000
= $9,750
Journal
|
Dec. 31, 2010 |
Bad debt expense |
9,750 |
|
|
Allowance for doubtful accounts |
9,750 |
(2)
Bad Debt Expense = Sales Revenue x percentage estimated as uncollectible
= 950,000 x 1%
= $9,500
Journal
|
Dec. 31, 2010 |
Bad debt expense |
9,500 |
|
|
Allowance for doubtful accounts |
9,500 |
Next part
(i)
Bad Debt Expense = Accounts receivable estimated as uncollectible + existing debit balance in allowance for doubtful accounts
= 11,750 + 2,000
= $13,750
Journal
|
Dec. 31, 2010 |
Bad debt expense |
13,750 |
|
|
Allowance for doubtful accounts |
13,750 |
(ii)
Bad Debt Expense = Sales Revenue x percentage estimated as uncollectible
= 950,000 x 1%
= $9,500
Journal
|
Dec. 31, 2010 |
Bad debt expense |
9,500 |
|
|
Allowance for doubtful accounts |
9,500 |
Next part
Journal
| January, 2011 |
Allowance for doubtful accounts |
3,000 | |
| Accounts receivable | 3,000 |
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