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Bad Debt Expense and Allowance Analysis

1. The adjustment made on December 31, 2020 was to debit Bad Debts Expense for $1,296 and credit Allowance for Bad Debts for $1,296. 2. The required balance for the Allowance for Bad Debts on December 31, 2020 is $19,058. 3. The net realizable value of Saluyot's receivables on December 31, 2020 is $779,902.

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78 views4 pages

Bad Debt Expense and Allowance Analysis

1. The adjustment made on December 31, 2020 was to debit Bad Debts Expense for $1,296 and credit Allowance for Bad Debts for $1,296. 2. The required balance for the Allowance for Bad Debts on December 31, 2020 is $19,058. 3. The net realizable value of Saluyot's receivables on December 31, 2020 is $779,902.

Uploaded by

Yham
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

TEST 10 - PROBLEM 1

1. The adjustment to correct the entry made on December 31, 2020 is:

Bad Debts Expense 1, 296


Allowance for Bad Debts

2. The required allowance balanace (per aging) on December 31, 2020 is:
19, 058

3. The net realizable value of Saluyot's receivable on December 31, 2020, amounts to:
779,902

Age Balance Adjustments Adjusted Balance


0-1 month 372,960 8,000 380,960
1-3 months 307,280 2,000 309,280
3-6 months 88,720 - 88,720
over 6 months 24,000 -4,000 8,000
12,000
TOTAL 792,960 6,000 798,960

Unadjusted balances
Understatment of accounts written off (6,832 - 6,032)
Write off of uncollectible amount
Custimer credit balances (8,000 + 2,000)
Corrected balance
Unlocated difference (798,960 - 793, 200)
Adjusted balances

Accounts Receivable, Dec. 31, 2020 798,960


Less: Required allowance per aging -19,058
Net realizable value 779,902

4. J should report bad debt expense for 2020 of:


13,344

Bad Debt Expense Recorded


Adjustments to arrive at required allowance
Correct bad debts expense for 2020

5. What entry is necessary to adjust the allowance account at December 31, 2020?
Allowance for Bad Debts 10,296
Bad Debts Expense
Required allowance balance
Allowance balance, Dec. 31
Per books
Recovery of account written off
Understatement of write off
Adjustment
1,296

Rate Required allowance


1% 3,810
2% 6,186
3% 2,662
50% 4,000
20% 2,400
19,058

Control Account Subsidiary Ledger


788,000 792,960
-800
-4,000 -4,000
10,000 10,000
793,200 798,960
5,760
798,960 798,960

23,640
-10,296
13,344

10,296
19,058
32,858
1,296
-800
-4,000 29,354
-10,296

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