Question

Kraft Foods Inc. is the second-largest food company in the world. Assume the company recently reported the following amounts in its unadjusted trial balance (in millions) as of December 31, 2017: Debits Credits Accounts Receivable $ 5,740 Allowance for Doubtful Accounts $ 220 Sales (assume all on credit) 49,700 Required: 1. Assume Kraft uses ½ of 1 percent of sales to estimate its Bad debt expense for the year. Prepare the adjusting journal entry required for the year, assuming no Bad debt expense has been recorded yet. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to the nearest whole dollar number.) 2. Assume instead that Kraft uses the aging of accounts receivable method and estimates that $390 million of its Accounts Receivable will be uncollectable. Prepare the adjusting journal entry required at December 31, 2017, for recording Bad Debt Expense. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions.)

Answer 1