Providing for Doubtful Accounts At the end of the current year, the accounts receivable account has...

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Providing for Doubtful Accounts At the end of the current year, the accounts receivable account has a debit balance of $747,0

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Answer 1

Answer #1

At the end of the current year the account receivable account has a debit balance of $ 747000 and sales amount to $ 8470000.

A) the allowance Accounts before adjustments hav credit balance of $ 10,100 and the baddebts expenses is 3/4 of 1% of sales .

Thus baddebts expenses =$ 8470000 × 3/4 × 1% = $ 84700 ×3/4.

Baddebts expenses = $ 63525. Under the allowance method the baddebts expenes is debited and the allowance for doubtful Account is credited, so the adjusting entry will have the same amount as = $ 63,525.

Amount of adjusting entries = $ 63,525.

B) allowance for doubtful Account has credited balance of $ 10100 before adjustments, and aging has lead to the balance of the doubtful Account of $ 32,300,

Here the allowance for doubtful Account has a credit balance closing balance should be = $ 32300 and opening of credit of $ 10100 is given so adjustments required is only of difference of opening and closing i.e $ 32300 - $ 10100 = $ 22,200.

Amount of adjusting entries = $ 22,200.

C) the allowance Accounts has a debit balance of $ 4500 , and baddebts expenes is 1/2 of 1 % sales .

Thus the baddebts expenes = $ 8470000 × 1% × 1/2 = $ 84700 × 1/2 = $ 42,350.

In allowance method the baddebts is debited and allowance for doubtful Account is credited so it will be credited with $ 42350, and after credit the balance will be $ 42350 - 4500 = $ 37850.

Amount of adjusting entries = $ 42,350.

D) here the balance before adjustments = $ 4500 and aging of Account receivable has led the balance for doubtful Account = $ 37400.

Here the account before adjustments was having debit balance and closing Account balance is credit balance of $ 37400, so the adjustments required will be of $ 37400 + $. 4500 = $ 41,900.

Amount of adjusting entry = $ 41,900.

Feel free to comment doubts if any..

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