Question

Required information The following information applies to the questions displayed below) Suzuki Supply reports the following amounts at the end of 2021 before adjustment) Credit Sales for 2021 Accounts Receivable, December 31, 2021 Allowance for Uncollectible Accounts, December 31, 2021 3240,000 35,000 1,200 (Credit) Required: 1. Record the adjusting entry for uncollectible accounts using the percentage of receivables method Suzuki estimates 11% of receivables will not be collected (f no entry is required for a particular transaction/event, select "No Journal Entry Required in the first account field.) View transaction list View journal entry worksheet No General Journal Debit Credit Date December 31, 2021 Bad Deot Expense Allowance for Uncollectible Accounts < Prey 13 14 15 of 17 Next >

Answer 1

1. 11% of receivables :
Allowance for uncollectible accounts for year ended 31/12/2021 = 35,000*11% = 3850
Allowance for uncollectible accounts already recognized = 1200
Hence, further allowance to be recorded = 3850-1200 = 2650
No.	Date	General Journal	Debit	Credit
1	December 31, 2021	Bad Debt expense a/c ..Dr	2,650
		To Allowance for Uncollectible Accounts		2,650
2. 3% of Credit sales
Allowance for uncollectible accounts for year ended 31/12/2021 = 240000*3% = 7200
Allowance for uncollectible accounts already recognized = 1200
Hence, further allowance to be recorded = 7200-1200 = 6000
No.	Date	General Journal	Debit	Credit
2	December 31, 2021	Bad Debt expense a/c ..Dr	6,000
		To Allowance for Uncollectible Accounts		6,000
3. Effect on net income and Total assets under both methods
	Percentage of Receivables Method			Percentage of Credit Sales Method
	Before	After	Effect/change	Before	After	Effect/change
Total Assets (Accounts receivable net of Allowance a/c)	33800	31150	-2650	33800	27800	-6000
Net Income	240000	237350	-2650	240000	234000	-6000