Question

Suzuki Supply reports the following amounts at the end of 2018 (before adjustment). Credit Sales for...

Suzuki Supply reports the following amounts at the end of 2018 (before adjustment).

Credit Sales for 2018 $256,000
  Accounts Receivable, December 31, 2018 51,000
  Allowance for Uncollectible Accounts, December 31, 2018 1,000 (Credit)

1. Record the adjustment for uncollectible accounts using the percentage-of-receivables method. Suzuki estimates 10% of receivables will not be collected. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Record the adjustment for uncollectible accounts using the percentage-of-credit-sales method. Suzuki estimates 2% of credit sales will not be collected. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

3. Calculate the effect on net income (before taxes) and total assets in 2018 for each method. Suzuki estimates 10% of receivables and 2% of credit sales respectively will not be collected.

Homework Answers

Answer #1
S.No Accounts Dr Cr
1 Bad debts expense 4100
To Allowance for Uncollectible Accounts{[51000*10%] - 1000} 4100
2 Bad debts expense 5120
To  Allowance for Uncollectible Accounts [256000 *0.02] 5120
Note:- uncollectible accounts using the percentage-of-credit-sales method does not consider for adjusting the unadjusted Balance of Allowance for Uncollectible Accounts,
3 Bad debts expense 9220
To  Allowance for Uncollectible Accounts [5100 + 5120 - 1000] 9220
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