My teacher gave out old tests to study with and I'm having trouble with this problem that has four parts.
5. Allowance for Bad Debts (Percent of Sales Method) On January 1st, Party Planners had a $40,000 balance in Accounts Receivable and a $3,000 credit balance in Allowance for Uncollectible Accounts (Allow for Unc.).
a) Prepare the Journal Entries if Party Planners had credit sales of $100,000 during the year and collections on their accounts of $94,000 during the year.
b) Prepare the Journal Entry if Party Planners estimates Bad deby Expense as of 2% of revenue.
c) Prepare the Journal Entry if Party Planners writes off uncollectible accounts totaling $1,700
d) What effect does the previous Entry (c) have on Net Income? What effect does the previous Journal Entry have on Current Assets? (increase, no effect, or decrease)
5. Allowance for Bad Debts (Percent of Sales Method) On January 1st, Party Planners had a $40,000 balance in Accounts Receivable and a $3,000 credit balance in Allowance for Uncollectible Accounts (Allow for Unc.).
a) Prepare the Journal Entries if Party Planners had credit sales of $100,000 during the year and collections on their accounts of $94,000 during the year.
b) Prepare the Journal Entry if Party Planners estimates Bad deby Expense as of 2% of revenue.
c) Prepare the Journal Entry if Party Planners writes off uncollectible accounts totaling $1,700
d) What effect does the previous Entry (c) have on Net Income? What effect does the previous Journal Entry have on Current Assets? (increase, no effect, or decrease)