Accounting Problem is killing me!! HELP!!!!!!?

Question

At Dec. 31 of the current year, JOHNSON CO. reported the following: total sales for the year $700,000.00 includes $160,000.00 in cash sales. Accounts Receivable balance at Dec.31, current year:$200,000.00. Bad debts written off during current year: $7,000.00 Balance of Allowance for Doubtful Accounts at Jan 1, current year: $8,300. Prepare the adjusting entries to record bad debts expense assuming this companies bad debts are estimated to equal: a.)2% of credit sales. b.)4% of accounts receivables. Thanks this is due by Monday. I am stupefied!!!

Sandy · Accepted Answer

Prepare the adjusting entries to record bad debts expense assuming this companies bad debts are estimated to equal: a.)2% of credit sales
Dr  Bad debts expense $10,800 (2% x $540,000)
Cr  Allowance for doubtful debts $10,800

b.)4% of accounts receivables
Allowance for doubtful debts-
Beginning balance $8,300
Bad debts written off ($7,000)
Current year expense ?
Ending balance $8,000 (4% x $200,000)

From the above, you can work out the current year expense to be $6,700
Dr  Bad debts expense $6,700
Cr  Allowance for doubtful debts $6,700

This lecture should help you.

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Accounting Problem is killing me!! HELP!!!!!!?

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