ASSIGNMENT 5.docx - PRINCIPLES OF ACCOUNTING 1 ASSIGNMENT 5...

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PRINCIPLES OF ACCOUNTING 1 ASSIGNMENT # 5 QUESTION 1 The Kaimana Villa uses the Allowance Method to record bad debts. At the end of the year, the unadjusted trial balance for Kaimana Villa included the following accounts: Debit Credit Accounts Receivable 232,000 Allowance for Doubtful Accounts 1,638 Sales (of which 25% were credit sales) 2,478,000 a If the Kaimana Villa were to use the aging of accounts receivable (balance sheet) approach and aging of the accounts receivable indicates that $8,000 of the current balance of accounts receivable is estimated to be uncollectible, give the adjusting entry to record bad debts expense at year end. (4 Marks) DATE ACCOUNT TITLE & EXPLANATION PR DEBIT CREDIT At year endBad debts expense 6,362 Allowance for doubtful accounts 6,362 To adjusted Allowance for doubtful accounts to the target. ($8,000-$1,638=$6,362) b If the Kaimana Villa were to use the aging of accounts receivable (balance sheet) approach and aging of the accounts receivable indicates that $8,000 of the current balance of accounts
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