E8-3 Recording, Reporting, and Evaluating a Bad Debt Estimate Using the Percentage of Credit Sales Method...

  

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E8-3 Recording, Reporting, and Evaluating a Bad Debt Estimate Using the Percentage of Credit Sales Method [LO 8-2] During the year ended December 31, 2012, Kelly's Camera Shop had sales revenue of $165,000, of which $82,500 was on credit. At the start of 2012, Accounts Receivable showed a $12,000 debit balance, and the Allowance for Doubtful Accounts showed a $590 credit balance. Collections of accounts receivable during 2012 amounted to $67,000. Data during 2012 follow: a. On December 10, 2012, a customer balance of $1,450 from a prior year was determined to be uncollectible, so it was written off. b. On December 31, 2012, a decision was made to continue the accounting policy of basing estimated bad debt losses on 2 percent of credit sales for the year. Required: 1. Give the required journal entries for the two events in December 2012. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) view transaction list Transaction a b journal entry worksheet General Journal No Transaction Recorded No Transaction Recorded Debit Credit 2. Show how the amounts related to Accounts Receivable and Bad Debt Expense would be reported on the balance sheet and income statement for 2012. Current Assets: Kelly's Camera Shop Balance Sheet (partial) At December 31, 2012 Kelly's Camera Shop Income Statement (partial) Year ending December 31, 2012 Operating Expenses: E8-3 Recording, Reporting, and Evaluating a Bad Debt Estimate Using the Percentage of Credit Sales Method [LO 8-2] During the year ended December 31, 2012, Kelly's Camera Shop had sales revenue of $165,000, of which $82,500 was on credit. At the start of 2012, Accounts Receivable showed a $12,000 debit balance, and the Allowance for Doubtful Accounts showed a $590 credit balance. Collections of accounts receivable during 2012 amounted to $67,000. Data during 2012 follow: a. On December 10, 2012, a customer balance of $1,450 from a prior year was determined to be uncollectible, so it was written off. b. On December 31, 2012, a decision was made to continue the accounting policy of basing estimated bad debt losses on 2 percent of credit sales for the year. Required: 1. Give the required journal entries for the two events in December 2012. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) view transaction list Transaction a b journal entry worksheet General Journal No Transaction Recorded No Transaction Recorded Debit Credit 2. Show how the amounts related to Accounts Receivable and Bad Debt Expense would be reported on the balance sheet and income statement for 2012. Current Assets: Kelly's Camera Shop Balance Sheet (partial) At December 31, 2012 Kelly's Camera Shop Income Statement (partial) Year ending December 31, 2012 Operating Expenses:

Answer rating: 100% (QA)

1 Transaction General journal Debit Credit a Allowance for Doubtful Accounts 1450 ... View the full answer