2010-05-28_031535_The_ledger_of_Hixson_Company

2010-05-28_031535_The_ledger_of_Hixson_Company - assuming...

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The ledger of Hixson Company at the end of the current year shows accounts receivable 120,000, sales 840,000 and sales returns and allowance 30,000. Instructions A) If Hixson uses the direct write off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Hixson determines that fells 1.400 balance is uncollectible. B) If allowance for doubtful accounts has a credit balance of 2,100 in the trial balance journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1 % of net sales, and (2) 10 % of accounts receivable C) If allowance for doubtful accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31,
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Unformatted text preview: assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable. a) No adjusting entry is required since under the Direct Write-off Method, the amount that was written off is directly debited to the Bad Debts Expense b) Debit Credit (1) Dec. 31 Bad Debts Expense $8,100 [($840,000 - $30,000) X 1%] Allowance for Doubtful Accounts $8,100 (2)Dec. 31 Bad Debts Expense $9,900 Allowance for Doubtful Accounts $9,900 [($120,000 X 10%) - $2,100] c) (1) Dec. 31 Bad Debts Expense $6,075 [($840,000 - $30,000) X .75%] Allowance for Doubtful Accounts $6,075 (2)Dec. 31 Bad Debts Expense $7,400 Allowance for Doubtful Accounts $7,400 [($120,000 X 6%) + $200]...
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2010-05-28_031535_The_ledger_of_Hixson_Company - assuming...

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