Kandel Company had the following data available for 2014 (before making any adjustments): Accounts receivable, 12/31/14 ................................

Question:

Kandel Company had the following data available for 2014 (before making any adjustments):
Accounts receivable, 12/31/14 ................................ $320,100 (Dr.)
Allowance for doubtful accounts .............................. 2,600 (Cr.)
Net credit sales, 2014 .............................................. 834,000 (Cr.)

Required
1. Prepare the journal entry to recognize bad debts under the following assumptions:

(a) Bad debts expense is expected to be 2% of net credit sales for the year

(b) Kandel expects it will not be able to collect 6% of the balance in accounts receivable at year-end.
2. Assume instead that the balance in the allowance account is a $2,600 debit. How will this affect your answers to part (1)?

Accounts Receivable
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...

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