The ledger of Marin Inc. at the end of the current year shows
Accounts Receivable $86,000; Credit Sales $800,000; and Sales
Returns and Allowances $44,000.
(a) | If Marin uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Marin determines that Matisse’s $700 balance is uncollectible. | |
(b) | If Allowance for Doubtful Accounts has a credit balance of $1,300 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 10% of accounts receivable. | |
(c) | If Allowance for Doubtful Accounts has a debit balance of $450 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 8% of accounts receivable. |
Prepare journal entries to record the above transactions.
(Credit account titles are automatically indented when
amount is entered. Do not indent manually.)
No. |
Date |
Account Titles and Explanation |
Debit |
Credit |
---|---|---|---|---|
(a) |
Dec. 31 |
enter an account title to record the first transaction | enter a debit amount | enter a credit amount |
enter an account title to record the first transaction | enter a debit amount | enter a credit amount | ||
(b) |
Dec. 31 |
enter an account title to record the second transaction | enter a debit amount | enter a credit amount |
enter an account title to record the second transaction | enter a debit amount | enter a credit amount | ||
(c) |
Dec. 31 |
enter an account title to record the third transaction | enter a debit amount | enter a credit amount |
enter an account title to record the third transaction | enter a debit amount | enter a credit amount |
date | particulars | Debit | Credit | |||||
Dec-31 | Bad debt expense | 700 | ||||||
Accounts receivable | 700 | |||||||
(being accounts receivable written off) | ||||||||
Dec-31 | bad debt expense | 82900 | ( Accounts receivable= 86000+800000-44000=842000) | |||||
Allowance for Doubtful Accounts | 82900 | Bad debt estimate= 842000 x 10% = 84200 | ||||||
( Being adjustment entry passed ) | balance in allowance for doubtful accounts= 1300 credit | |||||||
adjusting entry= 84200-1300=82900 | ||||||||
Dec-31 | bad debt expense | 67810 | bad debt estimate= 842000 x 8%=67360 | |||||
Allowance for Doubtful Accounts | 67810 | balance in allowance for doubtful accounts= 450 debit | ||||||
( Being adjustment entry passed ) | adjusting entry=67360+450 = 67810 | |||||||
The ledger of Marin Inc. at the end of the current year shows Accounts Receivable $86,000;...
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