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gOOvER gOOvER
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Santagos Industries gathered the following information from its accounting records for the year ended December 31, 2013, prior to adjustment:

Net credit sales for the year   $730,000
Accounts receivable balance, Dec. 31, 2013   145,000
Allowance for doubtful
   accounts balance, Dec. 31, 2013   1,850   Cr.

Santagos uses the allowance method of accounting for uncollectible accounts and estimates bad-debt expense at 1.5% of net credit sales.

Required:
a)  Prepare the adjusting entry to record bad-debt expense on December 31, 2013.
b)  Determine the balance in allowance for doubtful accounts after the adjusting entry is prepared.
c)  Show how the receivables would be reported on the December 31, 2013, balance sheet for Santagos Industries.
Textbook 
Accounting, Volume 1, Canadian Edition

Accounting, Volume 1, Canadian Edition


Edition: 9th
Authors:
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HanoiHanoi
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More solutions for this book are available here
a)    General Journal
Date   Accounts   Debit   Credit
Dec. 31   Bad-Debt Expense   10,950   
             Allowance for Doubtful Accts.      10,950

b) $10,950 + $1,850 = $12,800

c) Partial balance sheet

   Current assets:

   Accounts receivable   $145,000
   Less: Allowance for doubtful accounts   12,800   $132,200
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