Reference no: EM132477602

BeleVu Supplies showed the following selected adjusted balances at its December 31, 2019, year-end:

Accounts Receivable

Dec. 31/16 Balance                       490,000

Allowance for Doubtful Accounts

Dec. 31/16 Balance                          16,400

During the year 2020, the following selected transactions occurred:

a. Sales totalled $2,800,000, of which 25% were cash sales (cost of sales $1,804,000).

b. Sales returns were $108,000, half regarding credit sales. The returned merchandise was scrapped.

c. An account for $25,000 was recovered.

d. Several accounts were written off; $26,000.

e. Collections from credit customers totalled $1,790,000 (excluding the recovery in (c) above).

Part A

Required:

Question 1. Journalize transactions (a) through (e). You may find it useful to post your entries to T-accounts for Accounts Receivable and Allowance for Doubtful Accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Part B

Question 2. Prepare the December 31, 2020, adjusting entry to estimate bad debts assuming that uncollectible accounts are estimated to be 1% of net credit sales.

Question 3. What will be the balance of the Allowance for Doubtful Accounts on the December 31, 2020, balance sheet.

Question 4. What will bad debt expense be on the income statement for the year ended December 31, 2020?

Part C

Question 5. make the December 31, 2020, adjusting entry to estimate bad debts assuming that uncollectible accounts are estimated to be 3% of outstanding receivables.

Question 6. What will be the balance of the Allowance for Doubtful Accounts on the December 31, 2020, balance sheet.

Question 7. What will bad debt expense be on the income statement for the year ended December 31, 2020?