Kelly Green Corp. uses the allowance method for handling receivables. Total Sales for the year were $1,650,000. The unadjusted balance for Accounts Receivable was is $160,000 debit balance and Allowance for Doubtful Accounts $3,700 credit balance. Note: Situations A and C are independent of each other.
a) Prepare the Dec 31 adjusting entry assuming Kelly Green uses the percent of sales method for bad debts. Kelly estimates 1% of total sales will be uncollectible.
| Date | Description | Debit | Credit |
|---|---|---|---|
| Dec 31 | |||
| Dec 31 |
b) Show how the Accounts Receivable and Allowance for Doubtful Accounts appear on the balance sheet after the adjusting entry. hint: remember to post your adjusting entry.
| Accounts Receivable | |
| Less: Allowance for Doubtful Accounts | |
| Accounts Receivable, Net |
c) Prepare the Dec 31 adjusting entry assuming Kelly Green uses the percent of accounts receivable method for estimating uncollectible accounts. Kelly estimates 7% of accounts receivable will be uncollectible.
| Date | Description | Debit | Credit |
|---|---|---|---|
| Dec 31 | |||
| Dec 31 |
d) Show how the Accounts Receivable and Allowance for Doubtful Accounts appear on the balance sheet after the adjusting entry. hint: remember to post your adjusting entry.
| Accounts Receivable | |
| Less: Allowance for Doubtful Accounts | |
| Accounts Receivable, Net |
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