At the End of the Current Year, the Trial Balance

question 7

Short Answer

At the end of the current year, the trial balance of Johannes' Sporting Goods Shop included the accounts and balances shown below. Credit sales were $220,000. Returns and allowances on these sales were $4,000. Assume that the firm bases its estimate of the loss from uncollectible accounts on 3 percent of accounts receivable.
Accounts Receivable $ 63,000 Dr.
Allowance for Doubtful Accounts 600 Dr.
Sales 390,000 Cr.
Sales Returns and Allowances 6,000 Dr.
1. What is the balance in the Allowance for Doubtful Accounts account after the adjusting entry for the estimated loss from uncollectible accounts is posted?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?

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Definitions:

Service Salesperson

A professional who specializes in selling intangible products, such as service contracts or subscriptions.

Tangible Goods

Physical items that can be seen, touched, and possessed, including things like electronics, clothing, and furniture.

Order-getters

Salespeople who actively seek out customers and work to generate new sales through persuasive techniques.

Sales Strategy

A planned approach to selling products or services that aims to achieve competitive advantage and increase sales revenue.