Reference no: EM132803914
The following are the selected account balances of El Mar Company taken from its trial balance as of December 31, 2006.
Accounts Receivable P125,000
Allowance for Bad Debts 6,500
Sales 1,125,000
Sales Returns & Allowances 16,000
Sales discount 25,500
Required:
Problem 1: Give the adjusting entry, the income statement presentation of bad debts and the balance sheet presentation for accounts receivable at its realizable value under each of the following methods of providing for bad debts:
1. Bad debts are estimated to be 1% of gross sales.
2. Bad debts are estimated to be ½% of net sales.
3. Increase the allowance by 2% of the accounts receivable.
4. The allowance for bad debts should be increased to 5% of accounts receivable.
5. The aging schedule showed that uncollectible accounts will amount of P7,500.