The ledger of Marin Inc. at the end of the current year shows Accounts Receivable $82,000; Credit Sales $840,000; and Sales Returns and Allowances $49,000. (a) If Marin uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Marin determines that Matisse's $900 balance is uncollectible. (b) If Allowance for Doubtful Accounts has a credit balance of $1,200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 10% of accounts receivable. (c) If Allowance for Doubtful Accounts has a debit balance of $500 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 8% of accounts receivable.

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Business

Essence Daniel

23 February, 21:39

The ledger of Marin Inc. at the end of the current year shows Accounts Receivable $82,000; Credit Sales $840,000; and Sales Returns and Allowances $49,000. (a) If Marin uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Marin determines that Matisse's $900 balance is uncollectible. (b) If Allowance for Doubtful Accounts has a credit balance of $1,200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 10% of accounts receivable. (c) If Allowance for Doubtful Accounts has a debit balance of $500 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 8% of accounts receivable.

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Lamont Wilkinson · Answer 1

Dec 31

Debit Bad Debts Expense $900

Credit Accounts Receivable $900

(b)

Dec 31

Debit Bad Debts Expense $7,000

Credit Allowance for Doubtful Accounts $7,000

[ ($82,000 x 10%) - $1,200]

(c)

Dec 31

Debit Bad Debts Expense $7,060

Credit Allowance for Doubtful Accounts $7,060

[ ($82,000 x 8%) + $500]