Question

Exercise 7-9

The trial balance before adjustment of Windsor Inc. shows the following balances.

		Dr.		Cr.
Accounts Receivable		$96,400
Allowance for Doubtful Accounts		3,090
Sales Revenue (all on credit)				$612,900

Give the entry for estimated bad debts assuming that the allowance is to provide for doubtful accounts on the basis of (a) 5% of gross accounts receivable and (b) 6% of gross accounts receivable and Allowance for Doubtful Accounts has a $1,797 credit balance. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

Solution

No	General Journal	Debit	Credit
(a)	Bad debts expense	$          7,910.00
	Allowance for doubtful accounts		$         7,910.00
	(To record bad debts expense)

Working

Estimated balance of allowance for uncollectables (96400 x 5%)	$        4,820.00	Cr
Add: Balance in Allowance for uncollectable account (Dr)	$        3,090.00	Dr
Total bad debts to be recorded	$        7,910.00	Cr

.

.

Requirement b

No	General Journal	Debit	Credit
(b)	Bad debts expense	$          3,987.00
	Allowance for doubtful accounts		$         3,987.00
	(To record bad debts expense)

Working

Estimated balance of allowance for uncollectables (96400 x 6%)	$        5,784.00	Cr
Less: Balance in Allowance for uncollectable account (Cr)	$        1,797.00	Cr
Total bad debts to be recorded	$        3,987.00	Cr