Reference no: EM132532657
The following information is provided regarding Garry Limited's accounts receivable and allowance for doubtful accounts:
Accounts Receivable, January 1, 2019: $1,450,000
Collections of Accounts Receivable during the year: $1,700,000
Write-offs of Accounts Receivable: $ 425,000
Accounts Receivable, December 31, 2019: $1,800,000
Allowance for Doubtful Accounts (December 31, 2019 balance (before bad debts adjusting entry at December 31, 2019): $ 155,000(debit)
Required:
Question (a) Calculate the credit sales for the year 2019.
Question (b) Provide the journal entry that was made to write-off the uncollectible amounts during 2019.
Question (c) Ignoring your answer to (a) and assuming that credit sales for 2019 were $4.15 million, prepare the bad debts adjusting entry assuming that management estimates that 3.00% of the credit sales would be uncollectible.
Question (d) After recording your entry from part (c), is the balance in the allowance for doubtful accounts adequate? Explain