Question

Receivable for $25,000 and Sales 5. AG Inc. made a $25,000 sale on account with the following terms: 2/10, n/30. If the company uses the net method to record sales made on credit, what is/are the debit(s) in the journal entry to record the sale? CA Debit Accounts Receivable for $24,500. B) Debit Accounts Receivable for $24,500 and Sales Discounts for $500. 1 Debit Accounts Receivable for $25,000. ar net aAS C) D) Debit Accounts Receivable for $25,000 and Sales Discounts for $500. 25,ao (25 ) 6. Wellington Corp. has outstanding accounts receivable totaling $6.5 million as of December 31 and sales on credit during the year of $24 million. There is also a credit balance of S12,000 in the allowance for doubtful accounts. If the company estimates that 6 % of its outstanding receivables will be uncollectible, what will be the amount of bad debt expense recognized for the year? A) S 402,000. B) S 390,000. C) $1,440,000. D) S 378,000. 7. Wellington Corp. has outstanding accounts receivable totaling $6 million as of December 31 and sales on credit during the year of $30 million. There is also a debit balance of $24,000 in the allowance for doubtful accounts. If the company estimates that 8% of its outstanding receivables will be uncollectible, what will be the balance in the allowance for doubtful accounts after the year-end adjustment to record bad debt expense? A) $2,400,000. B) S 456,000. C) S 480,000. D) S 504,000.
I need help solving 6 and 7

Answer 1

6.

The correct answer is D) $378,000.

Supporting calculations:

Estimate of uncollectibles ($6,500,000*6/100)	$390,000
Less: Credit balance in the allowance for doubtful accounts	($12,000)
Bad Debt Expense for the Year	$378,000
Therefore, the bad debt expense for the year is $378,000, thus, the correct option is D.

7)

The correct option is C:

Supporting calculations:

Balance in the allowance for doubtful accounts after the adjustment ($6,000,000*8/100)	$480,000
Therefore, the correct answer is $480,000.

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