90.2K

Verified Solution

Link Copied!

Serial Problem Business Solutions LO P1, P2

Santana Rey, owner of Business Solutions, realizes that she needs to begin accounting for bad debts expense. Assume that Business Solutions has total revenues of $62,000 during the first three months of 2018, and that the Accounts Receivable balance on March 31, 2018, is $22,767. Required: 1a. Prepare the adjusting entry needed for Business Solutions to recognize bad debts expense, which are estimated to be 1% of total revenues on March 31, 2018 (assume a zero unadjusted balance in the Allowance for Doubtful Accounts at March 31). 1b. Prepare the adjusting entry needed for Business Solutions to recognize bad debts expense, which are estimated to be 2% of accounts receivable on March 31, 2018 (assume a zero unadjusted balance in the Allowance for Doubtful Accounts at March 31). 2. Assume that Business Solutions' Accounts Receivable balance at June 30, 2018, is $20,850 and that one account of $99 has been written off against the Allowance for Doubtful Accounts since March 31, 2018. If S. Rey uses the method prescribed in part 1b, what adjusting journal entry must be made to recognize bad debts expense on June 30, 2018?

Req 1A

Prepare the adjusting entry needed for Business Solutions to recognize bad debts expense, which are estimated to be 1% of total revenues on March 31, 2018 (assume a zero unadjusted balance in the Allowance for Doubtful Accounts at March 31).

Journal entry worksheet

Record estimated bad debts.

Req 1B

Prepare the adjusting entry needed for Business Solutions to recognize bad debts expense, which are estimated to be 2% of accounts receivable on March 31, 2018 (assume a zero unadjusted balance in the Allowance for Doubtful Accounts at March 31).

Journal entry worksheet

Record estimated bad debts.

Req 2

Assume that Business Solutions' Accounts Receivable balance at June 30, 2018, is $20,850 and that one account of $99 has been written off against the Allowance for Doubtful Accounts since March 31, 2018. If S. Rey uses the method prescribed in part 1b, what adjusting journal entry must be made to recognize bad debts expense on June 30, 2018?

Journal entry worksheet

Record the estimated bad debts.

Answer & Explanation Solved by verified expert

See Answer