tismarie
Sep 23, 2013, 07:01 PM
I understand how to perform the first question and the correct journal entries to apply for all questions. What I cannot figure out is the correct amount for the last two question. Can someone please help me understand what I am missing out of the problem please.
The ledger of Hixson Company at the end of the current year shows Accounts Receivable $120,000, Sales $840,000, and Sales Returns and Allowances $30,000.
If Hixson uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Hixson determines that Fell's $1,400 balance is uncollectible.
Date Account/Description Debit Credit
Dec. 31
If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1% of net sales, and (2) 10% of accounts receivable.
Date Account/Description Debit Credit
(1) Dec. 31
(2) Dec. 31
SHOW SOLUTION
If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable.
Date Account/Description Debit Credit
(1) Dec. 31
(2) Dec. 31
SHOW SOLUTION
The ledger of Hixson Company at the end of the current year shows Accounts Receivable $120,000, Sales $840,000, and Sales Returns and Allowances $30,000.
If Hixson uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Hixson determines that Fell's $1,400 balance is uncollectible.
Date Account/Description Debit Credit
Dec. 31
If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1% of net sales, and (2) 10% of accounts receivable.
Date Account/Description Debit Credit
(1) Dec. 31
(2) Dec. 31
SHOW SOLUTION
If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable.
Date Account/Description Debit Credit
(1) Dec. 31
(2) Dec. 31
SHOW SOLUTION