exercise 9-13 (algo) percent of accounts receivable method lo p3\nmazie supply company uses the percent of…

exercise 9-13 (algo) percent of accounts receivable method lo p3\nmazie supply company uses the percent of accounts receivable method. on december 31, it has outs $113,500, and it estimates that 3% will be uncollectible.\nprepare the year - end adjusting entry to record bad debts expense under the assumption that the allow has:\n(a) a $1,930 credit balance before the adjustment.\n(b) a $568 debit balance before the adjustment.\nview transaction list\njournal entry worksheet\n1 2\nprepare the year - end adjusting entry to record bad debts expense under the assumption that the allowance for doubtful accounts has a $1,930 credit balance before the adjustment.\nnote: enter debits before credits.\ntransaction general journal debit credit\n(a)

exercise 9-13 (algo) percent of accounts receivable method lo p3\nmazie supply company uses the percent of accounts receivable method. on december 31, it has outs $113,500, and it estimates that 3% will be uncollectible.\nprepare the year - end adjusting entry to record bad debts expense under the assumption that the allow has:\n(a) a $1,930 credit balance before the adjustment.\n(b) a $568 debit balance before the adjustment.\nview transaction list\njournal entry worksheet\n1 2\nprepare the year - end adjusting entry to record bad debts expense under the assumption that the allowance for doubtful accounts has a $1,930 credit balance before the adjustment.\nnote: enter debits before credits.\ntransaction general journal debit credit\n(a)

Answer

Explanation:

Step1: Calculate required ending balance of Allowance for Doubtful Accounts

The accounts - receivable is $113,500 and the estimated uncollectible percentage is 3%. So the required ending balance of Allowance for Doubtful Accounts is $113,500\times0.03 = $3,405$.

Step2: Calculate bad - debts expense for case (a)

The Allowance for Doubtful Accounts has a $1,930 credit balance before adjustment. The bad - debts expense is the difference between the required ending balance and the beginning credit balance. So, Bad Debts Expense=$3,405 - 1,930=$1,475$. The journal entry for (a) is:

Transaction General Journal Debit Credit
(a) Bad Debts Expense $1,475
Allowance for Doubtful Accounts $1,475

Step3: Calculate bad - debts expense for case (b)

The Allowance for Doubtful Accounts has a $568 debit balance before adjustment. To get to the required ending credit balance of $3,405, the bad - debts expense is the sum of the absolute value of the debit balance and the required ending balance. So, Bad Debts Expense=$3,405+568 = $3,973$. The journal entry for (b) is:

Transaction General Journal Debit Credit
(b) Bad Debts Expense $3,973
Allowance for Doubtful Accounts $3,973

Answer:

(a)

Transaction General Journal Debit Credit
Bad Debts Expense $1,475
Allowance for Doubtful Accounts $1,475
(b)
Transaction General Journal Debit Credit
-- -- -- --
Bad Debts Expense $3,973
Allowance for Doubtful Accounts $3,973