Ch.+7+Problem+Solutions

Ch.+7+Problem+Solutions - Problem 7-3B (35 minutes) Part 1...

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Problem 7-3B (35 minutes) Part 1 a. Expense is 1.2% of credit sales Dec. 31 Bad Debts Expense . ......................................... 35,112 Allowance for Doubtful Accounts . ........... 35,112 To record estimated bad debts [$2,926,000 x .012]. b. Expense is 0.7% of total sales Dec. 31 Bad Debts Expense . ......................................... 31,682 Allowance for Doubtful Accts. . ................. 31,682 To record estimated bad debts [($1,600,000 + $2,926,000) x .007]. c. Allowance is 5% of accounts receivable Dec. 31 Bad Debts Expense . ......................................... 42,000 Allowance for Doubtful Accounts . ........... 42,000 To record estimated bad debts. * * Estimated balance ($886,000 x 5%) . ...... $ 44,300 credit Unadjusted balance . ............................... 2,300 credit Required adjustment . ............................. $ 42,000 credit Part 2 Current assets Accounts receivable . ................................... $886,000 Less allowance for doubtful accounts . ..... (37,412
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This note was uploaded on 01/22/2011 for the course MGT 11A taught by Professor Armstrong during the Fall '08 term at UC Davis.

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Ch.+7+Problem+Solutions - Problem 7-3B (35 minutes) Part 1...

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