exercise 9-15 (algo) percent of receivables method lo p3\n a. estimate the balance of the allowance for…

exercise 9-15 (algo) percent of receivables method lo p3\n a. estimate the balance of the allowance for doubtful accounts assuming the company uses 5% of total accounts receivable to estimate uncollectibles, instead of the aging of receivables method.\n b. prepare the adjusting entry to record bad debts expense using the estimate from part a. assume the unadjusted balance in the allowance for doubtful accounts is a $12,500 credit.\n c. prepare the adjusting entry to record bad debts expense using the estimate from part a. assume the unadjusted balance in the allowance for doubtful accounts is a $1,500 debit.\n answer is not complete.\n complete this question by entering your answers in the tabs below.\n req a req b and c\n b. prepare the adjusting entry to record bad debts expense using the estimate from part a. assume the unadjusted balance in the allowance for doubtful accounts is a $12,500 credit.\n c. prepare the adjusting entry to record bad debts expense using the estimate from part a. assume the unadjusted balance in the allowance for doubtful accounts is a $1,500 debit.

exercise 9-15 (algo) percent of receivables method lo p3\n a. estimate the balance of the allowance for doubtful accounts assuming the company uses 5% of total accounts receivable to estimate uncollectibles, instead of the aging of receivables method.\n b. prepare the adjusting entry to record bad debts expense using the estimate from part a. assume the unadjusted balance in the allowance for doubtful accounts is a $12,500 credit.\n c. prepare the adjusting entry to record bad debts expense using the estimate from part a. assume the unadjusted balance in the allowance for doubtful accounts is a $1,500 debit.\n answer is not complete.\n complete this question by entering your answers in the tabs below.\n req a req b and c\n b. prepare the adjusting entry to record bad debts expense using the estimate from part a. assume the unadjusted balance in the allowance for doubtful accounts is a $12,500 credit.\n c. prepare the adjusting entry to record bad debts expense using the estimate from part a. assume the unadjusted balance in the allowance for doubtful accounts is a $1,500 debit.

Answer

Explanation:

Step1: Assume total accounts receivable is $x$.

Estimated balance of Allowance for Doubtful Accounts = $0.05x$

Step2: For part b

The required ending balance of Allowance for Doubtful Accounts is $0.05x$. The un - adjusted balance is a $12,500$ credit. Bad debts expense = Required ending balance - Un - adjusted credit balance Let the required ending balance be $E = 0.05x$. Bad debts expense $=0.05x - 12500$ The adjusting entry is: Debit Bad Debts Expense ($0.05x - 12500$); Credit Allowance for Doubtful Accounts ($0.05x - 12500$)

Step3: For part c

The un - adjusted balance is a $1,500$ debit. Bad debts expense = Required ending balance+ Un - adjusted debit balance Bad debts expense $=0.05x+1500$ The adjusting entry is: Debit Bad Debts Expense ($0.05x + 1500$); Credit Allowance for Doubtful Accounts ($0.05x + 1500$)

Since the value of total accounts receivable ($x$) is not given, we leave the answers in terms of $x$.

Answer:

a. Estimated balance of Allowance for Doubtful Accounts = $0.05\times$ Total accounts receivable b. Debit Bad Debts Expense ($0.05\times$ Total accounts receivable - 12500); Credit Allowance for Doubtful Accounts ($0.05\times$ Total accounts receivable - 12500) c. Debit Bad Debts Expense ($0.05\times$ Total accounts receivable+ 1500); Credit Allowance for Doubtful Accounts ($0.05\times$ Total accounts receivable + 1500)