Question

Q 5. At 31 July 2018, the trial balance of Odom Ltd has the following amounts before adjustment:

                                                                        Debits                   Credits

                       Accounts Receivable                $350,000

                      Allowance for Doubtful Debts                             $16,625

                      Sales $715,250

Required:

1.     Prepare the adjusting entry at 31 July 2018 for bad debts expense assuming that the ageing schedule indicates that $18,025 of accounts receivable will be uncollectable.

2.     Repeat (1) assuming that instead of a credit balance, there is a $6,200 debit balance in the Allowance for Doubtful Debts before the adjusting entry.

3.     A $6,060 account receivable was written off as uncollectable on 30^thNovember 2018. Prepare the journal entry to record the write-off.

4.     Repeat (3) assuming that Odom Ltd uses the direct write-off method instead of the allowance method in accounting for bad debts.

Answer 1

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