Net Accounts Receivable: Percentage of Sales Method Video Lessons

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Problem: You have the following information for Wendy’s Wedding Dresses: Accounts receivable $15,000 Allowance for Doubtful Accounts $300 Sales $50,000, of which $6,000 is cash sales Sales Discounts $1,000 (all credit sales) Sales returns $3,000 (all credit sales) Purchase discounts $2,500 If the company accrues for bad debts at 3% of net credit sales at 12/31, the adjusting entry should be: a. Debit: Bad Debt expense $1,200 and Credit: Allowance for bad debts $1,200 b. Debit: Bad Debt expense $900 and Credit: Allowance for bad debts $900 c. Debit: Bad Debt expense $1,380 and Credit: Allowance for bad debt $1,380 d. Debit: Bad debt expense $750 and Credit: Allowance for bad debt $750

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Problem Details

You have the following information for Wendy’s Wedding Dresses:

Accounts receivable $15,000

Allowance for Doubtful Accounts $300

Sales $50,000, of which $6,000 is cash sales

Sales Discounts $1,000 (all credit sales)

Sales returns $3,000 (all credit sales)

Purchase discounts $2,500


If the company accrues for bad debts at 3% of net credit sales at 12/31, the adjusting entry should be:

a. Debit: Bad Debt expense $1,200 and Credit: Allowance for bad debts $1,200

b. Debit: Bad Debt expense $900 and Credit: Allowance for bad debts $900

c. Debit: Bad Debt expense $1,380 and Credit: Allowance for bad debt $1,380

d. Debit: Bad debt expense $750 and Credit: Allowance for bad debt $750

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