Question

The ledger of Marin Inc. at the end of the current year shows Accounts Receivable $86,000; Credit Sales $800,000; and Sales Returns and Allowances $44,000.

(a)		If Marin uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Marin determines that Matisse’s $700 balance is uncollectible.
(b)		If Allowance for Doubtful Accounts has a credit balance of $1,300 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 10% of accounts receivable.
(c)		If Allowance for Doubtful Accounts has a debit balance of $450 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 8% of accounts receivable.

Prepare journal entries to record the above transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.	Date	Account Titles and Explanation	Debit	Credit
(a)	Dec. 31	enter an account title to record the first transaction	enter a debit amount	enter a credit amount
		enter an account title to record the first transaction	enter a debit amount	enter a credit amount
(b)	Dec. 31	enter an account title to record the second transaction	enter a debit amount	enter a credit amount
		enter an account title to record the second transaction	enter a debit amount	enter a credit amount
(c)	Dec. 31	enter an account title to record the third transaction	enter a debit amount	enter a credit amount
		enter an account title to record the third transaction	enter a debit amount	enter a credit amount

Answer 1

date	particulars	Debit	Credit
Dec-31	Bad debt expense	700
	Accounts receivable		700
	(being accounts receivable written off)
Dec-31	bad debt expense	82900		( Accounts receivable= 86000+800000-44000=842000)
	Allowance for Doubtful Accounts		82900	Bad debt estimate= 842000 x 10% = 84200
	( Being adjustment entry passed )			balance in allowance for doubtful accounts= 1300 credit
				adjusting entry= 84200-1300=82900
Dec-31	bad debt expense	67810		bad debt estimate= 842000 x 8%=67360
	Allowance for Doubtful Accounts		67810	balance in allowance for doubtful accounts= 450 debit
	( Being adjustment entry passed )			adjusting entry=67360+450 = 67810