During the current year, Sun Electronics, Incorporated, recorded credit sales of $780,000. Based on prior experience, it estimates a 2 percent bad debt rate on credit sales. a. On November 13 of the current year, an account receivable for $380 from a prior year was determined to be uncollectible and was written off. b. At year-end, the appropriate bad debt expense adjustment was recorded for the current year.

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Business

Odin Webster

2 October, 21:49

During the current year, Sun Electronics, Incorporated, recorded credit sales of $780,000. Based on prior experience, it estimates a 2 percent bad debt rate on credit sales. a. On November 13 of the current year, an account receivable for $380 from a prior year was determined to be uncollectible and was written off. b. At year-end, the appropriate bad debt expense adjustment was recorded for the current year.

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Chandler · Answer 1

Answer and Explanation:

According to the scenario, computation of the given data are as follow:-

Effects on transaction:-

Transactions Assets Amount ($) Stockholder's equity Amount ($)

a. Accounts receivable ($380) Bad-debt expense (780,000*2%) ($15,600)

Allowance for doubtful accounts $380

b. Allowance for doubtful accounts = ($780,000 * 2:100) = ($15,600)