Reference no: EM132360587
Question : Case
ABC companies use the allowance for doubtful accounts. Past experience shows that 1% of net credit sales will eventually be collectible. The account balance selected on 31 December 2016 and 31 December 2017 will appear below:
Net credit sales of $ 400,000 (31 dec 16), $ 450,000 (31 dec 17)
AR $ 75,000 (31 dec 16), $ 100,000 (31 dec 17)
Allowance for doubtful accounts $ 5,000 (31 dec 16), unknown ? (31 Dec 17)
A. Keep a journal to record the following events in 2017:
- August 10 2017 Sue's $ 1,000 receivables are not collectible
- 12 sept 2017 Tom's $ 4,000 receivables are not collectible
- 10 Oct 2017 received a check of $ 550 as payment for Sue's account whose receivables were written off because they were not collectible. she indicated the rest of her account would be paid in November
B. Make adjusting entry to record bad debt provisions for the year ending 31 December 2017.
What is the allowance for doubtful accounts balance as of 31 December 2017?