Question

Itd be great if you could run me through it:

Exercise 248
The Garvey Sign Company uses the allowance method in accounting for uncollectible accounts. Past experience indicates that 6% of accounts receivable will eventually be uncollectible. Selected account balances at December 31, 2016, and December 31, 2017, appear below:

12/31/2016 12/31/2017
Net Credit Sales $400,000 $500,000
Accounts Receivable 80,000 100,000
Allowance for Doubtful Accounts 4,000 ?

Enter the 12/31/2016 balances for Accounts Receivable and Allowance for Doubtful Accounts in a tabular summary. Use the summary to record the transactions.

Aug. 10 Determined that the account of Kurt West for $900 is uncollectible.
Sept. 12 Determined that the account of Jill Lynch for $3,000 is uncollectible.

Record the following events in 2017. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Assets = Liabilities + Stockholder's Equity
Accounts Receivable
-
Allow. For Doubt. Accounts
=
Accounts Payable
+
Common Stock
+
Retained Earnings
Rev. - Exp. - Div.
Bal. 12/31/2016
(a) 2017 Aug. 10

Sept. 12

Enter the 12/31/2016 balances for Accounts Receivable and Allowance for Doubtful Accounts in a tabular summary. Use the summary to record the transaction. Prepare the adjustment to record the bad debt provision for the year ended December 31, 2017. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Assets = Liabilities + Stockholder's Equity
Accounts Receivable
-
Allow. For Doubt. Accounts
=
Accounts Payable
+
Common Stock
+
Retained Earnings
Rev. - Exp. - Div.
Dec. 31 $

What is the balance of Allowance for Doubtful Accounts at December 31, 2017?

Balance of allowance for Doubtful Accounts at December 31, 2017

Dont know what to do with net credit sales especially

Answer 1

net credit sales 2017 = 500000

allowance balance should be =500000*6% = 30000$

journals

aug 10	Allowance for doubtful account	900
	account receivable		900
Sep 12	Allowance for doubtful account	3000
	account receivable		3000

	account receivable	allow for doubtful account	account payable	common stock	revenue	expense	dividend
bal.	80000	4000
Aug 10	-900	-900
Sept 12	-3000	-3000

Allowance for doubtful account t account for easy understanding

		4000	31/12/2016
Aug 10	900	29900	31/12/2017 [4000-900-3000-30000]
Sep 12	3000
		30000	31/12/2017 balance

adjustment entry

	Bad debt expense	29900
	allowance for doubtful account		29900

	account receivable	allow for doubtful account	account payable	common stock	revenue	expense	dividend
Dec. 31		29900				-29900

balance of allowance for doubtful account = 30000$