Reference no: EM13508731
Wondra Supplies showed the following selected adjusted balances at its December 31 , 2010,year-end:
Accounts receivable
Debits 490,000
Allowance for doubtful accounts
Credits 12,460
During the year 2011 , the following selected transactions occurred:a. Sales totalled $1 ,725,000, of which 85% were credit sales (cost of sales $1 ,207,500).b. Sales returns were $49,000, all regarding credit sales. The returned merchandise was scrapped.c. An account for $29,000 was recovered.d. Several accounts were written off, including one very large account; the total was $1 32,500.e. Collected accounts receivable of $1 ,500,500 (excluding the recovery in (c) above). Salesdiscounts of $26,000 were taken.
Part A
Required
1 . Journalize transactions (a) through (e). You may find it useful to post your entries toT-accounts for Accounts Receivable and Allowance for Doubtful Accounts.
Part B
Required
2. Prepare the December 31 , 201 1 , adjusting entry to estimate bad debts, assuming uncol-lectible accounts are estimated to be 8% of net credit sales.
3. Show how accounts receivable will appear on the December 31 , 201 1 , balance sheet.
4. What will bad debt expense be on the income statement for the year ended December 31 ,201 1 ?
Part C (independent of Part B)
Required
5. Prepare the December 31 , 201 1 , adjusting entry to estimate bad debts, assuming uncol-lectible accounts are estimated to be 4% of outstanding receivables.
6. Show how accounts receivable will appear on the December 31 , 201 1 , balance sheet.
7. What will bad debt expense be on the income statement for the year ended December 31 ,2011 ?
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