Question

help with both of these problems please

E6-7

E6-12

-L06-2 Recording Bad Debt Expense Estimates and Write-offs Using the Percentage of Credit Sales Method During the current year. Adams Assembly, Inc., recorded credit sales of $1,300,000. Based on prior experience, it estimates a l percent bad debt rate on credit sales. Required: Prepare journal entries for each transaction: a. On September 29 of the current year, an account receivable for $4,000 from March of the current year was determined to be uncollectible and was written off. b. The appropriate bad debt expense adjustment was recorded for the current year

Answer 1

E6-7)

a)

Date	Account title	Debit	credit
a	Allowance for doubtful account	4000
	Accounts receivable		4000
b	Bad debt expense	13000
	Allowance for doubtful account		13000
	[Being bad debt expense as a % of credit sales recorded :1300000*1%]

Note :In part a ,If there is no balance in allowance account ,we can use bad debt expense .

E6-12)

Category	Amount	% of un-collectible	Allowance for doubtful account at year end (a*b)
Not yet due	50000	3%	50000*3%= 1500
up to 180 days	14000	12%	1680
More than 180 days	4000	30%	1200
	68000
AMOUNT			4380

Bad debt expense = Allowance for doubtful account at year end - Un-adjusted balance in allowance account

                            = 4380 -200

                           = 4180

Date	Account title	Debit	credit
	Bad debt expense	4180
	Allowance for doubtful account		4180

2)

BALANCE SHEET (PARTIAL)
Current asset
Accounts receivable	68000
less:Allowance for doubtful account	(4380)
Accounts receivable ,Net realizable value	63620