Wondra Supplies showed the following selected adjusted balances at its December 31, 2022, year-end:

During 2023, the following selected transactions occurred:
a. Sales totalled $1,800,000, of which 85% were credit sales (cost of sales $987,000).
b. Sales returns were $31,000, all regarding credit sales. The returned merchandise was scrapped.
c. An account for $29,000 was recovered.
d. Several accounts were written off, including one very large account; the total was $65,500.
e. Collected accounts receivable of $1,630,000 (excluding the recovery in (c) above). Sales discounts of $22,000 were taken.

Part A

Required

1. Journalize transactions (a) through (e). You may find it useful to post your entries to T-accounts for Accounts Receivable and Allowance for Doubtful Accounts.

Part B

Required

2. Prepare the December 31, 2023, adjusting entry to estimate bad debts, assuming uncollectible accounts are estimated to be 8% of net credit sales.

3. Show how accounts receivable will appear on the December 31, 2023, balance sheet.

4. What will bad debt expense be on the income statement for the year ended December 31, 2023?

Part C 

Required

5. Prepare the December 31, 2023, adjusting entry to estimate bad debts, assuming uncollectible accounts are estimated to be 4% of outstanding receivables.

6. Show how accounts receivable will appear on the December 31, 2023, balance sheet.

7. What will bad debt expense be on the income statement for the year ended December 31, 2023?

Transcribed Image Text:

Accounts Receivable Dec. 31/22 Balance 490,000 Allowance for Doubtful Accounts 12,300 Dec. 31/22 Balance