Question

3. Lululemon Inc. prepares its year ends and they have gathered the following sales and corporate client accounting records for the year ended December 31, 2019, prior to adjustment: (20 marks) (Account Receivable) Sale Records Total Revenues $500,000 and Net Credit Sales $380,000 Accounts Receivable (Dec 31, 2019) = $20,000 Allowance for Uncollectible Accounts, prior to adjustment (Dec 31, 2019) = $5,000 debit balance Lululemon Inc. uses the allowance method of accounting for bad debts and estimates bad debts at 5% of net credit sales. Required a. Prepare the adjusting entry on December 31, 2019. te Account Explanation Dr Cr of 10 735 words - English (US 10095 + Give Feedbac

Answer 1

A B с D 1 Prepare adjusting entry as follows: 2 Date Account Explanation Debit Credit 3 31-Dec-19 Bad debt expense $ 24,000 4 Allowance for uncollectible accounts $ 24,000 5 (To record adjusting entry) 6 Note: Bad debt expense = (% of net credit sales + allowance debit 7 balance) = 5%* 380,000 + 5000