What will bad debt expense be on the income statement

Assignment Help Financial Accounting

Reference no: EM13180228

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 , 2011 , 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 , 2011, 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 , 2011 , balance sheet.

7. What will bad debt expense be on the income statement for the year ended December 31 ,2011

Reference no: EM13180228

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