87 ii 804 ph completion of the current fiscal year ending De

87% ii 8:04 ph completion of the current fiscal year ending December 1, the balance of ccn Receivable lor Yang\'s Gill Shon e sf30.OUO. Credit sales for the year wuru $355,2000 REQUIREID Make the necessary adjusting entry in gunerl joul fur uderea uf lhe lollnwingassumptinns. Shov calrulatinns for the amount of cach adjusment and the resulting net rpalizahle value. 1, Allowance for Doutful Accounts has a credit balance of 33U fa) The pRtage osales marhnd is used and bad debt epnse is (b] The percentage of receivables method is used and an analysis of the arounts nrndures an estimate nl 6.950 in uncollecrible accouncs. 2. Allvance fur Duubiful Accounl has a clebit balance of S400 (u) he pureof alesmeud is used and had debt expense i estimated to be 1.31 of credit sales. 1] The erceiilugu ur receivables method is used and an analysis of the S 5.685 in r collectible acr:n lints.

Solution

THe following are the required journal entries:

1.a.percentage of sales method

.............To Allowance for doubtful accounts a/c

net realisable value of accounts receivable = $30,000 - $330 - $7,104 =>$22,566.

b.percentage of receivables method:

net realisable value of accounts receivable = $30,000 - $6950 =>$23,050.

2.a.percentage of sales method @1.5%

net accounts receivable realisable = $30,000 + $400 (debit balance so add it) - $5,028.

=>$25,372.

b.

net accounts receivabe realisable = $30,000 - 5685 =>$24,315.

note: in case of percentage of credit sales method, the net realisable value of debtors = accounts receivable - existing credit balance (add in case of debit balance ) - bad debt expense amount.

in case of percentage of receivables method, the net receivable value of debtors = accounts receivable - latest estimate of uncollectible accounts.

December 31	Bad debt expense a/c	$7,104
	.............To Allowance for doubtful accounts a/c		$7,104
	(amount = credit sales * 2% =>$355,200*2% =>$7,104)