UNCOLLECTIBLE ACCOUNTS_PERCENTAGE OF SALES AND PERCEN OF RECEIVABLES At the completion of the current fiscal year...

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UNCOLLECTIBLE ACCOUNTS_PERCENTAGE OF SALES AND PERCEN OF RECEIVABLES At the completion of the current fiscal year ending Dece

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Answer 1

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1)	Allowance for Doubtful Accounts has a credit balance of $330

a)	percentage of sales method
	estimated bad debts = credit sales*percentage
		355,200*2%
		7104

	Journal entry
	Accounting titles & Explanations		Debit	Credit

	Bad debts expense		7,104
	Allowance for Doubtful accounts			7,104


	Net realizable value
	Account receivable		30,000
	less:Allowance for Doubtful accounts(7104+330)		7434
	Net realizable value		22,566



b)	percentage of receivables method
	Estimated bad debts = 6,950 -330
		6620


	Journal entry
	Accounting titles & Explanations		Debit	Credit

	Bad debts expense		6,620
	Allowance for Doubtful accounts			6,620


	Net realizable value
	Account receivable		30,000
	less:Allowance for Doubtful accounts		6,950
	Net realizable value		23,050



2)	Allowance for Doubtful accounts has a debit balance of $400



a)	percentage of sales method
	estimated bad debts = credit sales*percentage
		355,200*1.5%
		5328

	Journal entry
	Accounting titles & Explanations		Debit	Credit

	Bad debts expense		5,328
	Allowance for Doubtful accounts			5,328


	Net realizable value
	Account receivable		30,000
	less:Allowance for Doubtful accounts(5,328-400)		4,928
	Net realizable value		25,072



b)	percentage of receivables method
	Estimated bad debts = 5,685+400
		6085


	Journal entry
	Accounting titles & Explanations		Debit	Credit

	Bad debts expense		6,085
	Allowance for Doubtful accounts			6,085


	Net realizable value
	Account receivable		30,000
	less:Allowance for Doubtful accounts		5,685
	Net realizable value		24,315

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