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Providing for Doubtful Accounts At the end of the current year, the accounts receivable account has...

Providing for Doubtful Accounts

At the end of the current year, the accounts receivable account has a debit balance of $718,000 and sales for the year total $8,140,000.

  1. The allowance account before adjustment has a debit balance of $9,700. Bad debt expense is estimated at 3/4 of 1% of sales.
  2. The allowance account before adjustment has a debit balance of $9,700. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $31,000.
  3. The allowance account before adjustment has a credit balance of $9,500. Bad debt expense is estimated at 1/4 of 1% of sales.
  4. The allowance account before adjustment has a credit balance of $9,500. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $78,900.

Determine the amount of the adjusting entry to provide for doubtful accounts under each of the assumptions (a through d) listed above.

a. $
b. $
c. $
d. $
Business   Accounting   
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Answer #1

a  
Sales 8140000
X Estimated uncollectible   0.75%
Amount of the adjusting entry   61050
b  
Estimated uncollectible 31000
Less: Allowance balance 9700
Amount of the adjusting entry   21300
c
Sales 8140000
X Estimated uncollectible 0.25%
Amount of the adjusting entry   20350
d  
Estimated uncollectible 78900
Add: Allowance Debit balance   9500
Amount of the adjusting entry   88400

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