At December 31, 2015, Ingleton Company reports the following results for the year: Cash sales Credit sales $1,025,000 1,342,000 In addition, its unadjusted trial balance includes the following items: Accounts receivable Allowance for doubtful accounts $575,000 debit 7,500 credit A

Accounting Dec 01, 2020

At December 31, 2015, Ingleton Company reports the following results for the year: Cash sales Credit sales $1,025,000 1,342,000 In addition, its unadjusted trial balance includes the following items: Accounts receivable Allowance for doubtful accounts $575,000 debit 7,500 credit A. Dec 31, 2015 the company estimated bad debts as 3% of total Sale Date Account Title Debit Credit Asset How much is Bad Debt Expense using 3% of Total Sale method?

Expert Solution

Bad debts are estimated to be 3% of credit sales.
When using sales as a basis, the current balance in the Allowance account is ignored when making the adjustment.
$1,342000x 3% = 40260 adjustment
Dr Bad Debt Expense 40260
Cr Allowance for Doubtful Accounts 40260

b. Bad debts are estimated to be 3% of total sales.
1025000+ 1342000 = 2367000 total sales
2367000 x 3% = 71010 adjustment
Dr Bad Debt Expense 71010
Cr Allowance for Doubtful Accounts 71010

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