Assume That This Company's Bad Debts Are Estimated and Recorded

question 165

Essay

Assume that this company's bad debts are estimated and recorded as 1.5% of credit sales.
On December 31,of the current year,a company's unadjusted trial balance revealed the following: accounts receivable of $185,600; sales revenue of $1,280,000; (75% were on credit) and allowance for doubtful accounts of $1,600 (credit balance).
a.Show how accounts receivable and the allowance for doubtful accounts would appear on the balance sheet after adjustment.
b.Prepare the entry to write off a $1,500 account receivable on January 1 of the next year.
c.Show how accounts receivable and the allowance for doubtful accounts would appear on the balance sheet immediately after writing off the account in part 2.

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Definitions:

Stream of Consciousness

A literary style or technique that seeks to depict the myriad thoughts and feelings which pass through the mind.

Observable Behavior

Actions or reactions of an individual that can be directly observed and measured, typically in a scientific or psychological context.

Watson

Refers to John B. Watson, an American psychologist who established the psychological school of behaviorism, emphasizing the importance of observable behaviors and discounting mental activities.

Kohler

Wolfgang Köhler, a psychologist and one of the founders of Gestalt psychology, known for his work on insight learning.