Question

December​ 31, 2016​, Warm Weather Travel has an Accounts Receivable balance of $ 89,000. Allowance for Doubtful Accounts has a credit balance of $ 870 before the​ year-end adjustment. Service revenue​ (all on​ account) for 2016 was $ 650,000. Warm Weather estimates that​ doubful-account expense for the year is 4​% of service revenue. Requirement 1. Make the​ year-end entry to record​ doubtful-account expense. Show how Accounts Receivable and Allowance for Doubtful Accounts are reported on the balance sheet at December​ 31, 2016. Make the​ year-end entry to record​ doubtful-account expense. ​(Record debits​ first, then credits. Exclude explanations from any journal​ entries.) Journal Entry Date Accounts Debit Credit Dec 31 Doubtful-Account Expense Allowance for Doubtful Accounts Show how Accounts Receivable and the Allowance for Doubtful Accounts are reported on the balance sheet at December​ 31, 2016. BALANCE SHEET (Partial) Current assets: Accounts receivable Less: Allowance for doubtful accounts Accounts receivable, net

Answer 1

Doubtful-account expense

= 4% of service revenue on account

=4% x 650,000

=$26,000

Date	Account title and description	Debit S	Credit $
Dec-31-16	Doubtful account Expenses	26000
	Allowance for Doubtful account		26000

Credit balance of allowance for Doubtful account	870
Add: Doubtful account Expenses during the year	26000
Balance of allowance for Doubtful account after adjustment	26870

_________________________________________

balance sheet presentation

Warm Weather Travel Company
Balance sheet (partial)
As on December 31,2016
	Amount $	Amount $
Assets
Current Assets
Account receivable	89000
Less: Allowance for Doubtful account	26870
Account receivable Net		62130

answered by: anonymous