Determine the appropriate adjustments needed to account for Bad Debts. Be sure to show all work....

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Determine the appropriate adjustments needed to account for Bad Debts. Be sure to show all work. It's the end of August, 2020 and you are trying to determine how to adjust the Bad Debt Expense at month end. Below is your sales information for the month of August, 2020: Cash Sales $100,000 Credit Sales $350,000 Total Sales $450,000 Below is the ledger account balances for A/R and AFDA before you've made any adjusting entries: $110,000 DR $1,000 DR Required: Accounts Receivable Allowance for Doubtful Accounts A) Prepare month end adjusting entry using the Income Statement Approach. Assume you estimate Bad Debts to equal 1.5% of credit sales for the month. B) Prepare month end adjusting entry using the Balance Sheet Approach. Assume you estimate the Allowance for Doubtful Accounts should be 5% of Accounts Receivable. Determine the appropriate adjustments needed to account for Bad Debts. Be sure to show all work. It's the end of August, 2020 and you are trying to determine how to adjust the Bad Debt Expense at month end. Below is your sales information for the month of August, 2020: Cash Sales $100,000 Credit Sales $350,000 Total Sales $450,000 Below is the ledger account balances for A/R and AFDA before you've made any adjusting entries: $110,000 DR $1,000 DR Required: Accounts Receivable Allowance for Doubtful Accounts A) Prepare month end adjusting entry using the Income Statement Approach. Assume you estimate Bad Debts to equal 1.5% of credit sales for the month. B) Prepare month end adjusting entry using the Balance Sheet Approach. Assume you estimate the Allowance for Doubtful Accounts should be 5% of Accounts Receivable.

Answer rating: 100% (QA)

Answer A Using income statement approach we have to estimate bad debts upto 15 of credit s... View the full answer