Question

A trial balance before adjustment included the following: Debit Credit Accounts Payable $100,000 Accounts receivable $850,000 Allowance for doubtful accounts $18,450 Cost of goods sold $220,000 Total Sales (Cash sales 36%) $5,312,500 Sales returns and allowances $83,000 Required: Give journal entries assuming that the estimate of uncollectibles is determined by taking (show computations): (1) 5% of gross accounts receivable and (2) 1% of net sales.

Name: a trial balance before adjustment included the following debit credit accounts payable s1000000 accounts receivable 5850000 allowance for doubtful accounts 18450 cost of goods sold 220000 to 50692
Uploaded: 2022-02-23T01:49:05-08:00
Duration: 3 min 33 s
Channel: Derrick Danso
Description: a trial balance before adjustment included the following debit credit accounts payable s1000000 accounts receivable 5850000 allowance for doubtful accounts 18450 cost of goods sold 220000 to 50692

          A trial balance before adjustment included the following:
Debit Credit
Accounts Payable $100,000
Accounts receivable $850,000
Allowance for doubtful accounts $18,450
Cost of goods sold $220,000
Total Sales (Cash sales 36%) $5,312,500
Sales returns and allowances $83,000

Required: Give journal entries assuming that the estimate of uncollectibles is determined by taking (show computations): (1) 5% of gross accounts receivable and (2) 1% of net sales.

Added by Guillermo T.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Derrick Danso

02/23/2022

Step 1

- Gross accounts receivable: $850,000 - 5% of gross accounts receivable: 0.05 * $850,000 = $42,500 Step 2: Determine the adjustment needed for the allowance for doubtful accounts. - Present allowance for doubtful accounts: $18,450 - Adjustment needed: $42,500 - Show more…

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A trial balance before adjustment included the following: Debit Credit Accounts Payable $100,000 Accounts receivable $850,000 Allowance for doubtful accounts $18,450 Cost of goods sold $220,000 Total Sales (Cash sales 36%) $5,312,500 Sales returns and allowances $83,000 Required: Give journal entries assuming that the estimate of uncollectibles is determined by taking (show computations): (1) 5% of gross accounts receivable and (2) 1% of net sales.