During the current year, Witz Electric, Inc., recorded credit sales of $900,000. Based on prior experience, it estimates a 3 percent bad debt rate on credit sales. Required: Prepare journal entries for each transaction: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) a. On September 29 of the current year, an account receivable for $2,700 from March of the current year was determined to be uncollectible and was written off. b. The appropriate bad debt expense adjustment was recorded for the current year.

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Business

Serenity

1 October, 20:43

During the current year, Witz Electric, Inc., recorded credit sales of $900,000. Based on prior experience, it estimates a 3 percent bad debt rate on credit sales. Required: Prepare journal entries for each transaction: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) a. On September 29 of the current year, an account receivable for $2,700 from March of the current year was determined to be uncollectible and was written off. b. The appropriate bad debt expense adjustment was recorded for the current year.

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Janessa Case · Answer 1

Witz Electric, Inc.

Credit sales $900,000

Estimated Bad Debts 3 % of $ 900,000 = $ 27,000

From prior experience we have created an account for allowance for uncollectibles at 3 % of credit sales.

Allowance for Doubtful Accounts $27000 credit

Actual Bad Debts $ 2700 debit

Required Adjustment $ 24300 Cr in the account for allowance for uncollectibles.

September 29 Journal Entry

Bad Debts Expense $ 2700 debit

Allowance for Doubtful Accounts $2700 credit

Adjustment Entry

Allowance for Bad Debts $ 2700 Debit

Account Receivable $ 2700 Credit