On December 31, 2021, the unadjusted trial balance of Pearce Services showed the following balances (all...
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On December 31, 2021, the unadjusted trial balance of Pearce Services showed the following balances (all in their normal balance): Accounts receivable $400,000 Allowance for doubtful accounts 8,000 Sales (75% were on credit) 1,000,000 The business has given up trying to collect $5,000 of its accounts receivable but has not yet recorded the write-off entry. Required: a) Provide the entrv for the write-off. (2 marks) b) Assume the business uses the Percentage-of Accounts-Receivable allowance method for estimating uncollectible amounts. After recording the $5,000 of write-offs, the business has determined that 18% of its remaining accounts receivable are estimated to be uncollectible. Provide the entry to record bad- debt expense at the December 31, 2021 year-end. (3 marks) c) Now (ignoring part b), instead assume the business uses the Percent-of-Sales allowance method for estimating uncollectible amounts, and has experienced an average 6% rate of non-collection based on credit sales, provide the entry to record bad-debt expense at the December 31, 2021 year-end. (3 marks) On December 31, 2021, the unadjusted trial balance of Pearce Services showed the following balances (all in their normal balance): Accounts receivable $400,000 Allowance for doubtful accounts 8,000 Sales (75% were on credit) 1,000,000 The business has given up trying to collect $5,000 of its accounts receivable but has not yet recorded the write-off entry. Required: a) Provide the entrv for the write-off. (2 marks) b) Assume the business uses the Percentage-of Accounts-Receivable allowance method for estimating uncollectible amounts. After recording the $5,000 of write-offs, the business has determined that 18% of its remaining accounts receivable are estimated to be uncollectible. Provide the entry to record bad- debt expense at the December 31, 2021 year-end. (3 marks) c) Now (ignoring part b), instead assume the business uses the Percent-of-Sales allowance method for estimating uncollectible amounts, and has experienced an average 6% rate of non-collection based on credit sales, provide the entry to record bad-debt expense at the December 31, 2021 year-end. (3 marks)
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a Journal entry to write off Date Particulars Debit Credit Allowance for doubtful debts ac 500... View the full answer
Related Book For
Financial and Managerial Accounting Using Excel for Success
ISBN: 978-1111993979
1st edition
Authors: James Reeve, Carl S. Warren, Jonathan Duchac
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