QUIZ+5+SOLUTIONS

QUIZ+5+SOLUTIONS - Doubtful Accounts has a debit balance of...

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ACTG2P31: QUIZ #5 (15 MARKS) STUDENT NAME: The trial balance before adjustment of Pratt Company reports the following balances: Dr. Cr. Accounts receivable $100,000 Allowance for doubtful accounts $ 2,500 Sales (all on credit) 650,000 Sales returns and allowances 40,000 Instructions (a) Prepare the journal entries for estimated bad debts assuming that doubtful accounts are estimated to be (1) seven percent of gross accounts receivable Account Amount D R Bad Debts Expense 4,500 CR Allowance for Doubtful Accounts 4,500 Gross receivables $100,000 Rate 7% Total allowance needed7,000 Present allowance (2,500 ) Bad debts expense $ 4,500 (2) one percent of net sales. Account Amount D R Bad Debts Expense 6,100 CR Allowance for Doubtful Accounts 6,100 Sales $650,000 Sales returns and allowances (40,000 ) Net sales 610,000 Rate 1%
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Bad debts expense $ 6,100 (b) Assume that all the information from Part (a) is the same, except that the Allowance for
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Unformatted text preview: Doubtful Accounts has a debit balance of $2,500 instead of a credit balance. Prepare the journal entries for estimated bad debts. If there is no change in the journal entry from part (a), write “NO CHANGE”. (1) seven percent of gross accounts receivable Account Amount D R Bad Debts Expense 9,500 CR Allowance for Doubtful Accounts 9,500 Gross receivables $100,000 Rate 7% Total allowance needed 7,000 Present allowance 2,500 Additional amount required $ 9,500 (2) one percent of net sales. Account Amount D R NO CHANGE CR (c) Assume that an account in the amount of $500 has been deemed uncollectible and must be written off. Record the journal entry. Account Amount D R ALLOWANCE FOR DOUBTFUL ACCOUNTS $500 CR ACCOUNTS RECEIVABLE $500...
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This note was uploaded on 10/13/2010 for the course ACTG 2P31 taught by Professor Pacharn,p during the Fall '10 term at Brock University.

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QUIZ+5+SOLUTIONS - Doubtful Accounts has a debit balance of...

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