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.

Question

Jaycee Wade

Business

16 October, 05:00

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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Zachariah Harris · 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