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Exercise 9-3

The ledger of Costello Company at the end of the current year shows Accounts Receivable $110,000, Sales Revenue $840,000, and Sales Returns and Allowances $20,000.

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student submitted image, transcription available below
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If Costello uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Costello determines that L. Dole’s $1,400 balance is uncollectible. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date

Account Titles and Explanation

Debit

Credit

Dec. 31

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

SHOW LIST OF ACCOUNTS

LINK TO TEXT

student submitted image, transcription available below
student submitted image, transcription available below
student submitted image, transcription available below
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.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No.

Date

Account Titles and Explanation

Debit

Credit

(1)
Dec. 31

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

(2)
Dec. 31

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

SHOW LIST OF ACCOUNTS

LINK TO TEXT

student submitted image, transcription available below
student submitted image, transcription available below
student submitted image, transcription available below
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.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No.

Date

Account Titles and Explanation

Debit

Credit

(1)
Dec. 31

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

(2)
Dec. 31

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

student submitted image, transcription available below

SHOW LIST OF ACCOUNTS

LINK TO TEXT

User VegardKT
by
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1 Answer

2 votes

Main Answer:
To journalize the adjusting entry at December 31 using the direct write-off method for Costello Company, you need to debit the bad debts expense account and credit the accounts receivable account for the uncollectible amount of $1,400.

Step-by-step explanation:
When using the direct write-off method, the company waits until it is certain that a specific customer's account is uncollectible before recording the bad debts expense. In this case, L. Dole's $1,400 balance is deemed uncollectible.

To record this entry, you would debit the bad debts expense account to recognize the expense and credit the accounts receivable account to reduce the amount owed by L. Dole.

Conclusion:
The adjusting entry at December 31 for the direct write-off method would be:

Date | Account Titles and Explanation | Debit | Credit
Dec. 31 | Bad Debts Expense | $1,400 |
Dec. 31 | Accounts Receivable | | $1,400

User Sam Alekseev
by
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