Question

Johnson Corporation unadjusted trial balance at year-end include the following accounts. Compute the uncollectible account expense, and make the appropriate journal entry for the current year assuming the uncollectible account expense is determined as follows:

Sales(75% represent credit sales) credit 1,152,000, accounts receivable debit 288,000, allowance for doubtful accounts credit 2,184.

A. Income statement approach 1% of total sales.
B. Income statement approach 1.5% of credit sales.
C. Balance sheet approach and the allowance for doubtful accounts should be $12,000.

Answer 1

Step-by-step explanation:

The journal entries are shown below:

A. Uncollectible Expense A/c Dr $11,520

To Allowance for doubtful accounts A/c $11,520

(Being the uncollectible expense is recorded)

The computation is shown below:

= $1,152,000 × 1%

= $11,520

B. Uncollectible Expense A/c Dr $12,960

To Allowance for doubtful accounts A/c $12,960

(Being the uncollectible expense is recorded)

The computation is shown below:

= $1,152,000 × 1.5% × 75%

= $12,960

C. Uncollectible Expense A/c Dr $9,816

To Allowance for doubtful accounts A/c $9,816

(Being the uncollectible expense is recorded)

The computation is shown below:

= $12,000 - $2,184

= $9,816