Question

Question 2 The ledger of Metlock ASA at the end of the current year shows Accounts Receivable €127,800, Sales Revenue €845,200, and Sales Returns and Allowances €36,200. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) If Metlock uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Metlock determines that T. Thum’s €2,200 balance is uncollectible. (b) If Allowance for Doubtful Accounts has a credit balance of €2,900 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 2% of net sales, and (2) 10% of accounts receivable. (c) If Allowance for Doubtful Accounts has a debit balance of €230 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 3% of net sales and (2) 7% of accounts receivable. Date Account Titles and Explanation Debit Credit (a) Dec. 31 (b) (1) Dec. 31 (2) Dec. 31 (c) (1) Dec. 31 (2) Dec. 31

Answer 1

Date	Account Titles and Explanation	Debit	Credit
(a)	Dec. 31	Bad debt expense	2200
		Account receivable		2200
(b) (1)	Dec. 31	Bad debt expense (845200-36200*2%)	16180
		Allowance for doubtful accounts		16180
(2)	Dec. 31	Bad debt expense (127800*10%-2900)	9880
		Allowance for doubtful accounts		9880
(c) (1)	Dec. 31	Bad debt expense (845200-36200)*3%	24270
		Allowance for doubtful accounts		24270
(2)	Dec. 31	Bad debt expense (127800*7%+230)	9176
		Allowance for doubtful accounts		9176