During 2011, Lacee Enterprises had gross sales of $247,000. At the end of 2011, Lacee had accounts
Question:
During 2011, Lacee Enterprises had gross sales of $247,000. At the end of 2011, Lacee had accounts receivable of $83,000 and a credit balance of $5,600 in Allowance for Bad Debts. Lacee has used the percentage-of-sales method to estimate the bad debt expense. For the past several years, the amount estimated to be uncollectible has been 3%.
Instructions:
1. Using the percentage-of-gross-sales method, estimate the bad debt expense and make any necessary adjusting entries.
2. Assuming that 6% of receivables are estimated to be uncollectible and that Lacee decides to use the percentage-of-receivables method to estimate the bad debt expense, estimate the bad debt expense and make any adjusting entries.
3. Which of the two methods more accurately reflects the net realizable value of receivables? Explain.
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
Step by Step Answer:
1 Bad Debt Expense 7410 Allowance for Bad Debts 7410 247000 x 003 7410 Because the percentageofgr...View the full answer
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
