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.

Differentiate between various types of not-for-profit entities and their accounting principles.

Recognize how expenses are classified and reported by not-for-profit entities.

Grasp the concept and accounting treatment of unconditional promises to give.

Identify the classifications of net assets and their significance in not-for-profit reporting.

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