Quiz 5_CH6_Solution

Quiz 5_CH6_Solution - 2% of sales: Bad Debt Expense 3,400...

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Name__________ SOLUTION ______________________ Recitation ___________________ MGA 201: FALL 2008 QUIZ #5: Chapter 6 Temple Systems, Inc. has the following select information related to their operating year January 1 – December 31, 2008: a. Accounts Receivable, January 1, 2008 balance $ 56,000 b. Allowance for Bad Debts, December 31, 2008 (unadjusted credit balance) $ 2,400 c. Sales (all on credit) $170,000 d. Cash received (i.e., collected) from customers on account $160,500 1. Make the necessary journal entries to record the sales event in c. and customer cash collections in d.: c. Accounts Receivable 170,000 Sales 170,000 d. Cash 160,500 Accounts Receivable 160,500 2. Make the necessary journal entry if the firm decides to estimate its Bad Debt Expense at
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Unformatted text preview: 2% of sales: Bad Debt Expense 3,400 Allowance for Bad Debts 3,400 ($170,000 sales x .02 = $3,400; balance in Allowance for Bad Debts account is ignored) 3. Make the necessary journal entry if the firm decides to estimate its Bad Debt Expense using the accounts receivable aging method . The firms aging schedule estimated $5,500 of accounts receivable to be uncollectible. Bad Debt Expense 3,100 Allowance for Bad Debts 3,100 (Allowance for Bad Debts target balance = $5,500; $2,400 balance currently exists in the account; difference is Bad Debt Expense adjustment of $3,100)...
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