Bad debt expense based problem


Problem 1: Turner Co. estimates its uncollectible accounts expense to be 2 percent of credit sales. Turner's credit sales for 2006 were $1,000,000. During 2006, Turner wrote off $18,000 of uncollectible accounts. Turner's Allowance for Uncollectible Accounts account had a $15,000 balance on January 1, 2006. On its December 31, 2006 income statement, what amount should Turner report as bad debt expense?

Problem 2: Post Company estimates bad debts at 3% of gross accounts receivable. The following information is from the balances of Post before adjustments:

Debit    Credit
Accounts Receivable                         $2,600,000
Allowance for Uncollectible Accounts    20,800
Net Credit Sales                              $7,800,000

After adjustment at December 31, 2006, the Allowance for Uncollectible Accounts account should have a credit balance of?

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Finance Basics: Bad debt expense based problem
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