Knowledge Check 01 Cosmo Company reported credit sales of $345,000 for the calendar year in its first year of operations. At December 31, customers buying on credit owed $35,000 to the company. Based on the experience of similar businesses, management estimates that $3,500 of its accounts receivable will be uncollectible. Prepare the necessary journal entry by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

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8 May, 22:55

Knowledge Check 01 Cosmo Company reported credit sales of $345,000 for the calendar year in its first year of operations. At December 31, customers buying on credit owed $35,000 to the company. Based on the experience of similar businesses, management estimates that $3,500 of its accounts receivable will be uncollectible. Prepare the necessary journal entry by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

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Peterson · Answer 1

The journal entries are made as follows;

Explanation:

Bad Debt Expense Dr.$3,500

Allowance for Doubtful Accounts Cr.$3,500

As the allowance for doubtful accounts is estimated to be 1% of accounts receivable, therefore allowance for doubtful accounts will be Cr. and Bad Debt Expense Dr.