The Accounting Records of 10Com Ltd *The Credit Side of the Journal Entry (Or Entries)related to 2021

question 52

Essay

The accounting records of 10Com Ltd. show the following for 2021:
$$\begin{array} { | l | r | } \hline \text { Accounts receivable, Jan. 1, 2021 } & \$ 55,000 \\\hline \text { Accounts receivable, Dec. 31, } 2021 & 85,000 \\\hline \text { Allowarce for doubtful accounts, Jan. 1, 2021 } & 6,300 \\\hline \text { tad debt expense before year end adjusting or closing entries, Dec 31, 2021 } & 3,400 \mathrm { Dr } * \\\hline \text { Fustomer accounts written off as uncollectable during 2021 } & 5,550 ^ { * } \\\hline\end{array}$$ *The credit side of the journal entry (or entries)related to this amount went to allowance for doubtful accounts.
** Account write-offs were debited to the allowance for doubtful accounts.
More Info
For 2021, cash sales were $970,000, while credit sales were $720,000. Recently, 10Com's management has become concerned about various estimates used in its accounting system, including those relating to receivables and uncollectable accounts. The company is considering two alternatives.
For the purpose of comparing these two alternatives, the company has made the following estimates for each alternative.
•Alternative 1: Bad debts approximating 0.7% of credit sales.
•Alternative 2: Aging of the accounts receivable at the end of the period, where 80% would incur a 2% loss, while the remaining 20% would incur a 9% loss.
Required:
For each of the two alternatives listed above, calculate the bad debts expense for 2021 and the allowance for doubtful accounts balance at the end of 2021.

Recognize the importance of logical strength and the tests for the acceptability of an argument in ideological reasoning.

Explore the role of belief systems and convictions in shaping one's acceptance of ideological arguments.

Distinguish between deductive and inductive reasoning within the context of ideological arguments.

Acknowledge the social implications of ideological belief structures and how disagreement is perceived.

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Definitions:

Labor Economics

A branch of economics that studies the dynamics of the markets for wage labor, including demand and supply, wage determination, and labor productivity.

Normative Economics

A branch of economics that focuses on what the economy should be like or what particular policy actions should be recommended to achieve a desirable goal.

Formal Statement

A formal statement typically refers to an official, explicitly articulated declaration of facts, intentions, or principles.

Empirical Measure

A method or metric that is based on observation or experience rather than theory or pure logic.