Zeus Inc. recorded credit sales of $1,750,000 during 2015. At December 31, 2015, the company had a $250,000 debit balance in Accounts Receivable and a $13,000 credit balance in Allowance for Doubtful Accounts.
Required:
a.Prepare the necessary adjusting journal entry at December 31 to record the estimated bad debt expense, assuming that bad debts are estimated at 3% of credit sales.
b.Prepare the necessary adjusting journal entry at December 31 to record the estimated bad debt expense, assuming that bad debts are estimated at 8% of outstanding accounts receivable.
c.Assume that a customer whose $3,300 account had been written off earlier in the year now pays the balance owed in full. Prepare the journal entry, or entries, to record the collection of this customer's account.

Question

Zeus Inc. recorded credit sales of $1,750,000 during 2015. At December 31, 2015, the company had a $250,000 debit balance in Accounts Receivable and a $13,000 credit balance in Allowance for Doubtful Accounts.
Required: 
a.Prepare the necessary adjusting journal entry at December 31 to record the estimated bad debt expense, assuming that bad debts are estimated at 3% of credit sales.
b.Prepare the necessary adjusting journal entry at December 31 to record the estimated bad debt expense, assuming that bad debts are estimated at 8% of outstanding accounts receivable.
c.Assume that a customer whose $3,300 account had been written off earlier in the year now pays the balance owed in full. Prepare the journal entry, or entries, to record the collection of this customer's account.

Quizplus · Accepted Answer

The Answer of Zeus Inc. recorded credit sales of $1,750,000 during 2015. At December 31, 2015, the company had a $250,000 debit balance in Accounts Receivable and a $13,000 credit balance in Allowance for Doubtful Accounts.
Required: 
a.Prepare the necessary adjusting journal entry at December 31 to record the estimated bad debt expense, assuming that bad debts are estimated at 3% of credit sales.
b.Prepare the necessary adjusting journal entry at December 31 to record the estimated bad debt expense, assuming that bad debts are estimated at 8% of outstanding accounts receivable.
c.Assume that a customer whose $3,300 account had been written off earlier in the year now pays the balance owed in full. Prepare the journal entry, or entries, to record the collection of this customer's account.

Zeus Inc Recorded Credit Sales of $1,750,000 During 2015