At December 31 of the Current Year,a Company Reported the Following

question 121

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.

---

Definitions:

UCC's Writing

Refers to the requirement under the Uniform Commercial Code that certain contracts, to be enforceable, must be in writing.

Quantity

A measurable amount or the total number, volume, or extent of something.

Quality

Quality refers to the inherent or distinctive characteristics or properties of a product or service that determine its perceived value and reliability by the consumer.

Statute of Frauds

A legal principle that requires certain contracts to be in writing and signed by the parties involved to be enforceable.