Reference no: EM132787684
The following data relates to Medicore Inc. for the year 2020:
Credit sales for 2020: $6,500,000
Sales returns and allowances for 2020: $300,000
Accounts receivable as at Dec. 31, 2020: $750,000
Allowance for doubtful accounts as at Jan. 1, 2020: $18,000
- Medicore estimates its bad debt expense during the year as 0.2% of net credit sales. On May 15, 2020, Medicore unexpectedly collected $10,000 of a previously written-off account.
Required:
Problem 1: Record the journal entries for:The collection of the previously written-off account on May 15;
Problem 2: Bad debt expense for the year.
Problem 3: After the journal entries from a) had been completed, management reviewed the balance in the allowance for doubtful accounts, and determined that it should be 5% of gross accounts receivable. Prepare the adjusting journal entry required.