Acc 557 - and (2) 10% of accounts receivable. Dec 1st (1)...

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When using the direct write-off method, Accounts Receivable is immediately credited for the  write-off. When using the percentage of sales allowance method, the balance in Allowance for Doubtful  Accounts is ignored when making the adjusting entry. When using the percentage of receivables allowance method, the CREDIT balance in Allowance  for Doubtful Accounts AFTER the adjustment must equal the amount estimated to be  uncollectible.  If Hixson uses the direct write-off method to account for uncollectible accounts, journalize the  adjusting entry at December 31, assuming Hixson determines that Fell's $1,400 balance is  uncollectible. Dr Bad Debt Expense 1,400  Cr Accounts Receivable--Fell Account 1,400 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, 
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Unformatted text preview: and (2) 10% of accounts receivable. Dec 1st (1) (840,000 - 30,000) x 1% = 8,100 Dr Bad Debt Expense 8,100 Cr Allowance for Doubtful Accounts 8,100 Dec 1st (2) 120,000 x 10% = 12,000 12,000 - 2,100 = 9,900 Dr Bad Debt Expense 9,900 Cr Allowance for Doubtful Accounts 9,900 If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable. Dec. 31 (1) (840,000 - 30,000) x 0.75% = 6,075 Dr Bad Debt Expense 6,075 Cr Allowance for Doubtful Accounts 6,075 Dec. 31 (2) 120,000 x 6% = 7,200 7,200 + 200 = 7,400 Dr Bad Debt Expense 7,400 Cr Allowance for Doubtful Accounts 7,400...
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Acc 557 - and (2) 10% of accounts receivable. Dec 1st (1)...

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