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24 May, 01:48

QS 9-8 Percent of sales method LO P3 Warner Company's year-end unadjusted trial balance shows accounts receivable of $105,000, allowance for doubtful accounts of $660 (credit), and sales of $340,000. Uncollectibles are estimated to be 1% of sales. Prepare the December 31 year-end adjusting entry for uncollectibles.

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  1. 24 May, 01:54
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    Bad Debts Expense $ 2740 Debit

    Allowance for doubtful accounts $ 2740 Credit

    Explanation:

    Warner Company

    Accounts receivable $105,000,

    Allowance for doubtful accounts $660 (credit),

    Sales $340,000

    Uncollectibles are estimated to be 1% of sales.

    Uncollectibles of 1% of sales means that after adjusting entry is passed the uncollectible amount must be $3400 (1% of $340,000).

    We have a credit balance of $ 660

    The debit balance in the Allowance for doubtful accounts must be $ 3400.

    The adjustment will be = $3400 - $660 = $ 2740

    The Adjusting Entry will be

    Bad Debts Expense $ 2740 Debit

    Allowance for doubtful accounts $ 2740 Credit
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Home » Business » QS 9-8 Percent of sales method LO P3 Warner Company's year-end unadjusted trial balance shows accounts receivable of $105,000, allowance for doubtful accounts of $660 (credit), and sales of $340,000. Uncollectibles are estimated to be 1% of sales.
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