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  • 3A Percentage of Sales Method

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    Ryoma Echizen
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    Salazar Inc. reported accounts receivable of $235,000 and credit sales of $1,850,000 on May 31, 2024. The company estimates bad debts at 2% of credit sales. To adjust for bad debts, the allowance for doubtful accounts will increase by 2% of credit sales, or $37,000. On the balance sheet, accounts receivable, net will be reported as $235,000 less the $39,000 allowance for doubtful accounts, which is $196,000.

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    Salazar Inc. reported accounts receivable of $235,000 and credit sales of $1,850,000 on May 31, 2024. The company estimates bad debts at 2% of credit sales. To adjust for bad debts, the allowance for doubtful accounts will increase by 2% of credit sales, or $37,000. On the balance sheet, accounts receivable, net will be reported as $235,000 less the $39,000 allowance for doubtful accounts, which is $196,000.

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    6 views1 page

    3A Percentage of Sales Method

    Uploaded by

    Ryoma Echizen
    Salazar Inc. reported accounts receivable of $235,000 and credit sales of $1,850,000 on May 31, 2024. The company estimates bad debts at 2% of credit sales. To adjust for bad debts, the allowance for doubtful accounts will increase by 2% of credit sales, or $37,000. On the balance sheet, accounts receivable, net will be reported as $235,000 less the $39,000 allowance for doubtful accounts, which is $196,000.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    3A Percentage of Sales Method

    Salazar Inc. shows the following information on May 31, 2024, the company’s fiscal year-end:

    Account Debit Credit


    Accounts receivable $235,000
    Allowance for doubtful accounts 2,000
    Sales ($448,000 cash sales) $1,850,000

    The company’s accountant estimates bad debts to be 2% of credit sales.

    Required:

    a.) Prepare the adjustment to allowance for doubtful accounts based on the information
    above.
    b.) Show how accounts receivable, net would be disclosed on the balance sheet.

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