Question

a.

Metlock, Inc. had net sales in 2020 of $1,410,600. At December 31, 2020, before adjusting entries, the balances in selected accounts were Accounts Receivable $384,800 debit, and Allowance for Doubtful Accounts $1,814 debit. Assume that 11% of accounts receivable will prove to be uncollectible. Prepare the entry to record bad debt expense. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

b.

Metlock, Inc. had net sales in 2020 of $1,410,600. At December 31, 2020, before adjusting entries, the balances in selected accounts were Accounts Receivable $384,800 debit, and Allowance for Doubtful Accounts $3,820 credit. Assume Metlock prepares an aging schedule that estimates total uncollectible accounts at $24,000. Prepare the entry to record bad debt expense. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

Solution a:

Metlock Inc.
Journal Entries
Date	Particulars	Debit	Credit
31-Dec	Bad debts expense Dr ($384,800*11% + $1,814)	$44,142.00
	To Allowance for doubtful accounts		$44,142.00
	(To record bad debts expense for the year)

Solution b:

Metlock Inc.
Journal Entries
Date	Particulars	Debit	Credit
31-Dec	Bad debts expense Dr ($24,000 - $3,820)	$20,180.00
	To Allowance for doubtful accounts		$20,180.00
	(To record bad debts expense for the year)