Question

# Question 2 The ledger of Sheridan Company at the end of the current year shows Accounts...

Question 2 The ledger of Sheridan Company at the end of the current year shows Accounts Receivable \$84,500; Credit Sales \$756,230; and Sales Returns and Allowances \$37,220. (a) If Sheridan Company uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Sheridan Company determines that Matisse’s \$893 balance is uncollectible. (b) If Allowance for Doubtful Accounts has a credit balance of \$1,107 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 10% of accounts receivable. (c) If Allowance for Doubtful Accounts has a debit balance of \$480 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 8% of accounts receivable.

 Date Account title Debit credit a Bad debt expense 893 Accounts receivable 893 b Bad debt expense 7343 Allowance for doubtful account 7343 c Bad debt expense 7240 Allowance for doubtful account 7240

b)Esimated uncollectible account at end = 84500*.10=8450

Bad debt expense= Esimated uncollectible account at end -unadjusted balance in allowance account

= 8450-1107

= 7343

c)Esimated uncollectible account at end = 84500*.08= 6760

Bad debt expense= Esimated uncollectible account at end -unadjusted balance in allowance account

= 6760-(-480)

= 6760+480

= 7240

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