Question

Exercise 8-05 The ledger of Swifty Corporation at the end of the current year shows Accounts...

Exercise 8-05

The ledger of Swifty Corporation at the end of the current year shows Accounts Receivable $105,000; Sales Revenue $837,000; and Sales Returns and Allowances $22,600.

(a) If Swifty uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Swifty determines that L. Dole’s $1,800 balance is uncollectible.
(b) If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 15% of accounts receivable.
(c) If Allowance for Doubtful Accounts has a debit balance of $196 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 10% of accounts receivable.


(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.

Account Titles and Explanation

Debit

Credit

(a)
(b)
(c)

Homework Answers

Answer #1
  • Journal entries asked

No.

Account Titles and Explanation

Debit

Credit

(a)

Bad Debt Expense [or Uncollectible account expense]

$1,800

   Account receivables [L Dole]

$1,800

(b)

Bad Debt Expense [or Uncollectible account expense]

$13,650

   Allowance For Doubtful accounts [($105000 x 15%) required - $ 2100 existing]

$13,650

(c)

Bad Debt Expense [or Uncollectible account expense]

$10,696

   Allowance For Doubtful accounts [($105000 x 10%) required + $ 196 debit existing]

$10,696

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