Question

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.

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