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  • Chap 4 Prob 5 Act 3

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    Bad debts expense is calculated for 20x1 and 20x2 using two methods: 1) Percentage of net credit sales - 2.5% of $9,824,000 in sales for 20x2 is $196,480; 2.5% of $2,670,000 in sales for 20x1 is $53,400. 2) Percentage of accounts receivable - 5% of $2,456,000 receivables for 20x2 is $122,800; 5% of $836,000 receivables for 20x1 is $41,800.

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    Bad debts expense is calculated for 20x1 and 20x2 using two methods: 1) Percentage of net credit sales - 2.5% of $9,824,000 in sales for 20x2 is $196,480; 2.5% of $2,670,000 in sales for 20x1 is $53,400. 2) Percentage of accounts receivable - 5% of $2,456,000 receivables for 20x2 is $122,800; 5% of $836,000 receivables for 20x1 is $41,800.

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    3 views2 pages

    Chap 4 Prob 5 Act 3

    Uploaded by

    xbautista124
    Bad debts expense is calculated for 20x1 and 20x2 using two methods: 1) Percentage of net credit sales - 2.5% of $9,824,000 in sales for 20x2 is $196,480; 2.5% of $2,670,000 in sales for 20x1 is $53,400. 2) Percentage of accounts receivable - 5% of $2,456,000 receivables for 20x2 is $122,800; 5% of $836,000 receivables for 20x1 is $41,800.

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    Activity 3:Bad debts expense

    Dec. 31,20x2 Dec. 31,20x1 Bad debts as percentage of net credit sales- 2.5%
    Accounts Receivable 2,456,000 836,000 Bad debts as percentage of account receivables-
    AFBD - - Accounts that should be written off:
    Net sales(80%on credit) 9,824,000 2,670,000 in 20x1 from 20x1 sales - 12,000
    in 20x2 from 20x1 and 20x2 - 115,000

    A. B. 20x1
    BDE- 20x2(9,824,000*80%*2.5%)= 196,480 squeeze Allowance for bad debts
    BDE- 20x1(2,670,000*80%*2.5%)= 53,4000 squeeze
    write off 12,000
    BDE 20x1
    (836,000*5%)=41,800 83,200

    BDE 20x2
    (2,456,000*5%)=122,800
    tage of net credit sales- 2.5% Requirements:
    tage of account receivables- 5% A. How much bad debts expenses in 20x2 and 20x1
    d be written off: (percentage of credit sales method)
    les - 12,000 B. How much bad debts expenses in 20x2 and 20x1
    nd 20x2 - 115,000 (percentage of receivables method)

    Allowance for bad debts Allowance for bad debts


    41,800 BDE 122,800 BDE
    write off 115,000
    53,400 squeeze 196,480 squeeze
    204,280

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