Question

The ledger of Windsor, Inc. at the end of the current year shows Accounts Receivable $84,000; Credit Sales $830,000; and Sales Returns and Allowances $44,000. (a) If Windsor uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Windsor determines that Matisse’s $800 balance is uncollectible. (b) If Allowance for Doubtful Accounts has a credit balance of $1,450 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 11% of accounts receivable. (c) If Allowance for Doubtful Accounts has a debit balance of $400 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 9% of accounts receivable.

Answer 1

The answer is given below;

Step-by-step explanation:

a. Bad Debt Expense Dr.$800

Account Receivable Cr.$800

b. $84,000*11%= $9,240

Credit balance in trail balance ($1,450)

Total $7,790

Bad Debt Expense Dr.$7,790

Account Receivable Cr.$7,790

C. Debit Balance $400

84,000*9%= $7,560

Total $7,960

Bad Debt Expense Dr.$7,960

Account Receivable Cr.$7,960