Nairobi Corp.'s unadjusted trial balance includes the following balances: Dr. $150,000 Cr. Accounts receivable.. Allowance for...

 

Transcribed Image Text:

Nairobi Corp.'s unadjusted trial balance includes the following balances: Dr. $150,000 Cr. Accounts receivable.. Allowance for doubtful accounts.. $ 3,500 720,000 Sales (all on credit).... Sales returns and allowances. 30,000 Instructions a) Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be (1) 5% of gross accounts receivable and (2) 2% of net sales. b) Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $3,500 instead of a credit balance. Nairobi Corp.'s unadjusted trial balance includes the following balances: Dr. $150,000 Cr. Accounts receivable.. Allowance for doubtful accounts.. $ 3,500 720,000 Sales (all on credit).... Sales returns and allowances. 30,000 Instructions a) Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be (1) 5% of gross accounts receivable and (2) 2% of net sales. b) Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $3,500 instead of a credit balance.

Answer rating: 100% (QA)

PART A i Bad debt expense 4000 DR Allowance for doubtful accounts 4000 CR ii Bad debt expense 13800 ... View the full answer