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

question 173

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).
1.Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the balance sheet after adjustment.
2.Prepare the entry to write off a $1,500 account receivable on January 1 of the next year.
3.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.

---

Definitions:

Output Price

The cost at which goods or services are offered for sale in the marketplace.

Graduate School

An advanced academic institution providing postgraduate education in various disciplines, leading to degrees like Master's or Doctorate.

Factor Of Production

An essential input to the production process, such as labor, capital, land, and entrepreneurship.

Marginal Productivities

The additional output that is produced by using one more unit of a particular input, ceteris paribus.