Question

tooth company 's year-end unadjusted trial balance lists the following balances at december 31 2017

cash sales: 800.000$

credit sales: 1,700,000

account receivable: 280.000 debit

allowance for doubtful accounts: 8,000 debit

Do the following:

1)prepare the adjusting journal entry, IN GOOD FORM, to record bad debt expense assuming uncollectible receivables are estimated to be 2% of credit sales. (the company uses the allowance method)

2)prepare the adjusting journal entry IN GOOD FORM, to record bad debt expense assuming uncollectible receivables are estimated to be 5% of year end accounts receivable (the company uses the allowance method)

3) on october 1st the receivable from Elly copany in the amount of 6,000$ was writted of as uncollectible. however, on December 19th Mr. Elly came and paid his debt of 6,000$. Prepare the journal entries, IN GOOD FORM, necessary to record Mr elly's payment on December 19th (the company uses the allowance method).

Answer 1

1) Adjusting entry

Date	account and explanation	Debit	Credit
Dec 31	Bad debt expense (1700000*2%)	34000
	Allowance for doubtful accounts		34000

2) Adjusting entry

Date	account and explanation	Debit	Credit
Dec 31	Bad debt expense (280000*5%+8000)	22000
	Allowance for doubtful accounts		22000

3) Journal entry

Date	account and explanation	Debit	Credit
Oct 1	Allowance for doubtful accounts	6000
	Account receivable		6000
Dec 19	Account receivable	6000
	Allowance for doubtful accounts		6000
	Cash	6000
	Account receivable		6000