At December 31 of the Current Year, a Company Reported

question 172

Essay

At December 31 of the current year, a company reported the following:
Total sales for the current year: $780,000, includes $160,000 in cash sales.
Accounts receivable balance at Dec. 31, current year: $190,000.
Bad debts written off during the current year: $6,800.
Balance of allowance for doubtful accounts at January 1, current year: $8,300 credit.
Prepare the necessary adjusting entries to record bad debts expense assuming this company's bad debts are estimated to equal:
a. 1.5% of credit sales
b. 5% of accounts receivable

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Definitions:

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