Question

The ledger of the Tortillo company at the end of the current year shows Accounts Receivable of $110,000 and Sales of $700,000.

Journalize the adjusting entry for end of the period for each of the following independent scenarios:

a) If Allowance for Doubtful Accounts has a debit balance of $2,000 in the trial balance and bad debts are expected to be 6% of accounts receivable.

b) If Allowance for Doubtful Accounts has a credit balance of $2,200 in the trial balance and bad debts are expected to be 6% of accounts receivable.

c) If Allowance for Doubtful Accounts has a credit balance of $3,200 in the trial balance and bad debts are expected to be 1% of sales.

d) If Allowance for Doubtful Accounts has a debit balance of $2,400 in the trial balance and bad debts are expected to be 1% of sales.

Answer 1

Journal Entry:

Date	Account Name	Debit	Credit
A.	Bad Debts Expense	$8,600
	Allowance for doubtful accounts		$8,600
	( 110,000 * 6%= $6600+2000)
B.	Bad Debt Expense	$4,400
	Allowance for doubtful accounts		$4.400
	( 110,000 *6% = $6600 - 2200)
C.	Bad Debt Expense	$3,800
	Allowance for doubtful accounts		$3,800
	(700,000*1%= $7000 -3200)
D.	Bad Debt Expense
	Allowance for doubtful accounts	$9,400
	( 700,000 *1% = 7000 +2400)		$9,400