Estimating and reporting bad debts LO3 LO4 LO6
At December 31, 2010, Ingleton Company reports the following results for the year.
Required
1. Prepare the adjusting entry for Ingleton Co. to recognize bad debts under each of the following independent
assumptions:
a. Bad debts are estimated to be 2.5% of credit sales.
b. Bad debts are estimated to be 1.5% of total sales.
c. An aging analysis estimates that 6% of year-end accounts receivable are uncollectible.
2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December
31, 2010, balance sheet given the facts in part 1a.
3. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December
31, 2010, balance sheet given the facts in part 1c.
Check Bad debts expense:
(1b) $35,505, (1c) $27,000
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