Question

Question 6 of 6 < - / 10 III View Policies Current Attempt in Progress Sandhill Company reports the following financial information before adjustments. Dr. Cr. Accounts Receivable $155,400 Allowance for Doubtful Accounts $3.790 Sales Revenue (all on credit) 819,100 Sales Returns and Allowances 54.900 Prepare the journal entry to record bed debt expense assuming Sandhill Company estimates bad debts at (a) 5% of accounts receivable and (b) 5% of accounts receivable but Allowance for Doubtful Accounts had a $1,630 debit balance. (If no entry is required, select "No Entry" for the account titles and enter for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (a) (b)

Answer 1

	Journal entries
(a)
Date	General Journal	DEBIT ($)	CREDIT ($)
	Bad Debt Expense	3,980.00
	Allowance for Bad Debts		3,980.00
(b)
Date	General Journal	DEBIT ($)	CREDIT ($)
	Bad Debt Expense	9,400.00
	Allowance for Bad Debts		9,400.00
	Explanation
(a)	5% of accounts receivable uncollectible = $155,400*5% = $7,770
	Credit balance of allowance for doubtful accounts = $3,790
	Hence, Bad Debt Expense = 7,770 - 3,790 = $3,980
(b)	5% of accounts receivable uncollectible = $155,400*5% = $7,770
	Debit balance of allowance for doubtful accounts = $1,630
	Hence, Bad Debt Expense = 7,770 + 1,630 = $9,400