[littlemoney08]

At December 31 of the current year, a company reported the following:
Total sales for 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
Prepare the necessary adjusting entries to record bad debts expenses assuming this company's bad debts are estimated to equal:
a. 1.5% of credit sales
b. 5% of accounts receivable.
Show the calculations, journal entries and resulting ‘T’ Accounts (Record answers in Space Below)



Debit Cash 160,000
Credit Sales 780,000
Credit Allowance 8,300
Debit A/R 190,000
Debit A/R 780,000
Credit A/R 160,000
Credit A/R 6,800

So I was getting a total of $794,900 for a/r that just doesn’t feel right. Can anyone can critique my work?

And I know for the credit sales I have to do the current year times 1.5% and I will get bad debt expense
So that would be 780,000 times 1.5% which equals 11,700
Dr. Bad Debt Expense 11,700
Cr. Allowance (11,700)


All right for A/R I did 5% x 190,000 = 9,500
But since there was a balance of 8,300 before 9,500-8,300=1,200
DR. Bad Debt Expense 1,200
Cr. Allowance (1,200)

All right does this math seem wrong and I missing something. Y’alls help will greatly be apperciated

[morgaine300]

I see two main difficulties you need to pay attention to. One is dates. You aren't paying attention to things like that the A/R balance is already a year-end balance, so why do things to it to change the balance at all?

The allowance account, on the other hand, is the balance from the beginning of the year. What would the write-off's do to that balance? You aren't considering that.

I'm also not sure what this list is supposed to be:

Debit Cash 160,000
Credit Sales 780,000
Credit Allowance 8,300
Debit A/R 190,000
Debit A/R 780,000
Credit A/R 160,000
Credit A/R 6,800

They aren't proper journal entries if that's what you're trying to do. I wouldn't begin to know how to tell you to correct it, since I'm not even sure what it's supposed to be. It only asked for the adjusting entries.

And credit sales aren't 780,000. Are the 160,000 worth of cash sales still credit sales?

[littlemoney08]

But why else would I need T accounts?

[morgaine300]

Nothing in my answer implies that you don't need or can't use t accounts. So I don't understand why you're asking that.