Farr Co. elects to use the percentage-of-sales basis in 2017 to record bad debt expense. It...
Question:
Farr Co. elects to use the percentage-of-sales basis in 2017 to record bad debt expense. It estimates that 2% of net credit sales will become uncollectible. Salas revenues are $829,000 for 2017, sales returns and allowances are $56,900, and the allowance for doubtful accounts has a credit balance of $9,000.
Prepare the adjusting entry to record bad debt expenses in 2017.
Percentage of Sales Method of Bad debts:
Bad debt is a loss for the company as it refers to the amount of credit sales that will be uncollectible from the accounts to whom the sales were made and to figure out the expense various methods are used one of which is the percentage of sales method, which assumes an estimated bad debt percentage on the net credit sales of the company ignoring the existing balance in the allowance for doubtful accounts.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerAnswer:
Adjusting entry to record bad debt expenses:
| Date | General Journal | Debit | Credit |
| 2017 | Bad debt expense | $15,442 | |
| Allowance for doubtful accounts | $1... |
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Uncollectible Accounts, the Allowance Method & Bad Debt
from
Chapter 7 / Lesson 3
9.9K
Learn about the allowance method for uncollectible accounts. Explore how businesses use the allowance method for bad debt and how to calculate bad debt expenses.
Related to this Question
- Farr Co, elects to use the percentage-of-sales basis in 2017 to record bad debt expense. It estimates that 2% of net credit, sales will become uncollectible. Sales revenues are $829,000 for 2017, sale
- Farr Co. elects to use the percentage-of-sales basis in 2017 to record bad debt expense. It estimates that 4% of net credit sales will become uncollectible. Sales revenues are $630,000 for 2017, sales returns and allowances are $50,500, and the allowance
- Farr Co. elects to use the percentage-of-sales basis in 2014 to record bad debt expense. It estimates that 2% of net credit sales will become uncollectible. Sales revenues are $857,000 for 2014, sales returns and allowances are $58,300, and the allowance
- Farr Co. elects to use the percentage-of-sales basis in 2014 to record bad debt expense. It estimates that 2% of net credit sales will become uncollectible. Sales revenues are $800,000 for 2014, sales returns and allowances are $40,000, and the allowance
- Glacier Ice Company uses a percentage-of-net-sales method to account for estimated bad debts. Historically, 3 percent of net sales has proven to be uncollectible. During 2017 and 2018, the company reported the following: 2018 2017 Gross sales $1,500,000 $
- Erik Co. elects to use the percentage-of-sales basis in 2012 to record bad debts expense. It estimates that 2% of net credit sales will become uncollectible. Sales revenues are $800,000 for 2012, sales returns and allowances are $45,000, and the allowance
- Danner Corporation reported net sales of $650,000, $720,000, and $780,000 in the years 2016, 2017, and 2018, respectively. If 2016 is the base year, what percentage do 2018 sales represent of the base? a. 20% b. 120% c. 108% d. 83%
- Modern Products, Inc. had accounts receivable of $240,000 in 2016, and $300,000 in 2017. Net sales for 2017 were $3,000,000, and gross profit margin was $1,200,000. The average collection period for 2017 was (blank).
- Macarthy Landscape Supply's selected accounts as of December 31, 2018, follow. Selling Expenses $12,900 Interest Revenue 900 Net Sales Revenue 134,700 Cost of Goods Sold 114,000 Administrative Expenses 10,200 Compute the gross profit percentage for 2018.
- Balance sheet data for Betty DeRose, Inc. for 2017 appears below: Betty's 2017 income statement is given below: Sales revenue 400,000 Cost of goods sold 293,000 Depreciation expense 18,000 Bad debt
- A firm uses 5% of credit sales to estimate its bad debt expense. Under this method, the total bad debt expense for the current year was $20,000. Credit sales for the first three quarters of the current year were $100,000, $110,000, and $120,000. What were
- The following information is for Tide Corporation: ($ thousands) 2017 2016 Net sales $265,360 $214,000 Cost of goods sold 130,026 63,344 Determine the 2016 and 2017 trend percents for net sales using 2016 as the base year.
- During 2018, Beltram. Inc. had Sales of $3,563.3 million, Gross profit of $1,634.6 million and Selling, general, and administrative expenses of $1,278.0 million. What was Beltram's Cost of sales for 2018? a. $ 88.1 million b. $ 1,115.7 million c. $ 1,5
- Based on prior experience, GBI estimates that approximately 1/2� % of the net credit sales (gross credit sales minus returns of credit sales) for the month will become bad de
- The current section expense of Scoggin Inc.'s balance sheets at December 31, 2016, and 2017, are presented here. Scoggin's net income for 2017 was $154,300. Depreciation expense was $24,000. 2017 20
- The current sections of Scoggin Inc.'s balance sheets at December 31, 2016 and 2017, are presented here. Scoggin's net income for 2017 was $150,300. Depreciation expense was $23,900. Prepare the net
- The current sections of Scoggin Inc.'s balance sheets at December 31, 2018 and 2019, are presented here. Scoggin's net income for 2019 was $153,000. Depreciation expense was $24,000. 2019 2018
- U Pargo Company is preparing its budgeted income statement for 2017. Relevant data about its sales, production, and direct materials budgets are as follows sales. Sales for the year are expected to to
- Ebbers Corporation overstated its ending inventory balance by $14, 500 in 2018. What impact will this error have on the cost of goods sold and gross profit in 2018 and 2019?
- Jefferson uses the percent of sales method of estimating uncollectible expenses. Based on past history, 2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000.
- Stellar Corporation reported the following for 2017: net sales $1,232,000, cost of goods sold $737,300, selling and administrative expenses $338,200, and an unrealized holding gain on available-for-sa
- Livanos, Inc. records al its sales as credit sales and pays cash operating costs in the month incurred. Amounts for 2017 are given in the table that follows.
- Bargains Co. reported annual net sales for 2014 and 2015 of $668,000 and $747,000, respectively. Its year-end balances of accounts receivable follow: December 31, 2014 $59,000 December 31, 2015 $93,000 Calculate the days' sales uncollected at the end of e
- Kingbird Corporation had net sales of $2,404,500 and interest revenue of $37,700 during 2017. Expenses for 2017 were cost of goods sold $1,466,900, administrative expenses $214,700, selling expenses $
- Charter Corporation, which began business in 2016, appropriately uses the installment sales method of accounting for its installment sales. The following data were obtained for sales during 2016 and 2017: 2016 2017 Installment sales $490,000 $506,000 Cos
- A company understated its ending inventory balance by $7,000 in 2018. What impact will this error have on the cost of goods sold and gross profit in 2018 and 2019?
- Use the following selected information from Wheeler. LLC to determine the 2017 and 2016 trend percentages for net sales using 2016 as the base. 2017 2016 Net sales $286,200 $233,400 Cost of goods sold 149,900 131.590 Operating expenses 53,240 51,240 Net
- Grouper Corporation had net sales of $2,430,000 and interest revenue of $31,200 during 2017. Expenses for 2017 were cost of goods sold $1,454,200, administrative expenses $218,700, selling expenses $2
- 1) Plasma Inc. uses the percentage of credit sales method to estimate Bad Debt Expense. The company reported net credit sales of $610,000 during the year. Plasma has experienced bad debt losses of 3%
- Corporation had net sales of $2,409,000 and interest revenue of $35,100 during 2017. Expenses for 2017 were cost of goods sold $1,452,700, administrative expenses $215,700, selling expenses $287,700,
- Swifty Corporation reported net sales of $660,000, $726,000, and $795,000 in the years 2016, 2017, and 2018, respectively. If 2016 is the base year, what percentage do 2018 sales represent of the base?
- The current sections of Scoggin Inc's balance sheets at December 31, 2016 and 2017, are presented here. Scoggin's net income for 2017 was $152,400. Depreciation expense was $23,900. Prepare the net c
- Sales for the year for Victor Company were $1,000,000, 70 percent of which were on credit. The average gross profit rate was 40 percent on sales. Account balances follow: Accounts receivable (net) in
- The 2018 income statement of Anderson Medical Supply Company reported net sales of 58 million, cost of goods sold of $4.8 million, and net income of $800,000. The following table shows the company's comparative balance sheets for 2018 and 2017: ($ in tho
- Pango Company is preparing its budgeted income statement for 2017. Relevant data pertaining to its sales, production, and direct materials budgets are as follows. Sales: Sales for the year are expecte
- Pargo Company is preparing its budgeted income statement for 2017. Relevant data pertaining to its sales, production, and direct materials budgets are as follows. Sales: Sales for the year are expect
- Teal Corporation had net sales of $ 2 , 429 , 800 and interest revenue of $ 40 , 500 during 2017. Expenses for 2017 were cost of goods sold $ 1 , 452 , 600 , administrative expenses $ 221 , 700 , selling expenses $ 289 , 000 , and interest expense
- Sandhill Co. has these comparative balance sheet data: Additional information for 2017: 1. Net income was $34,100. 2. Sales on account were $377,100. Sales returns and allowances amounted to $27,600.
- Sellograph Corporation reports sales of $10 million for Year 2, with a gross profit margin of 40%. 20% of Sellograph's sales are on credit. | |Year 1 |Year 2 |Accounts receivable |$150,000 |$170,000 |
- Carla Co. reports the following information for 2017: sales revenue: $762,900, cost of goods sold: $518,900, operating expenses: $83,600, and an unrealized holding loss on available-for-sale securities for 2017 of $53,600. It declared and paid a cash divi
- Nieto Co. elects to use the percentage-of-sales basis in 2008 to record bad debts expenses. It estimates that 3% of net credit sales will become uncollectible. Sales are $806,637 for 2008, sales returns and allowances are $46,389, and the allowance for do
- Selected information for 2018 is: cost of goods sold, $5,000,000 average inventory, $2,000,000 net sales, $8,000,000 average receivables, $980,000 net income, $700,000 Assuming a 360-day year, what was the inventory turnover ratio for 2018?
- Selected information for 2018 is: cost of goods sold, $6,000,000 average inventory, $2,000,000 net sales, $8,000,000 average receivables, $980,000 net income, $700,000. Assuming a 360-day year, what was the inventory turnover ratio for 2018?
- Sales for the year for Victor Company were $1,000,000, 70 percent of which were on credit. The average gross profit rate was 45 percent on sales. Account balances follow. Compute the turnover for the
- Bonita Corporation had net sales of $2,409,400 and interest revenue of $38,100 during 2017. Expenses for 2017 were cost of goods sold $1,463,800, administrative expenses $222,000, selling expenses $28
- Pargo Company is preparing its budgeted income statement for 2017. Relevant data pertaining to its sales, production, and direct materials budgets are as follows. Sales for the year are expected to total 1,300,000 units. Quarterly sales are 20%, 24%, 23%,
- Modern Products, Inc. had accounts receivable of $320,000 in 2019, and $358,000 in 2020. Net sales for 2020 were $3,160,000, and gross profit was $1,600,000. The accounts receivable turnover for 2020 was (blank).
- DuckWing Stores (DWS) reported sales of $620,000 for the year; one-half of sales were on credit. The average gross profit percentage was 25 percent on sales. Account balances follow: Beginning Ending Accounts receivable (net) $41,000 $59,000 Inventory 57
- Brisky Corporation had net sales of $2,400,000 and interest revenue of $31,000 during 2017. Expenses for 2017 were cost of goods sold $1,450,000, administrative expenses $212,000, selling expenses $280,000, and interest expense $45,000. Brisky's tax rate
- Sales for the year for Victor Company were $1,200,000, 70 percent of which were on credit. The average gross profit on sales was 45 percent. Additional account balances were: Ending Beginning Accounts receivable (net) $61,000 $62,000 Inventory 79,000 35,0
- You have the following year-end account balances: Cost of Goods sold $60,000 Sales $198,000 Sales returns and allowances $5,000 What amount is reported as Net Sales? a. $133,000 b. $193,000 c. $197,000 d. $207,000
- Bonita Corporation reported the following for 2020: Net sales $1,207,600 Cost of goods sold $737,300 Selling and administrative expenses $329,300 Unrealized holding gain on available-for-sale debt securities $21,000 Prepare a statement of comprehensive in
- Ivanhoe Co. reports the following information for 2017: Sales revenue $767,200, Cost of goods sold $503,000, Operating expenses $87,800, and An unrealized holding loss on available-for-sale securities for 2017 of $59,600. It declared and paid a cash
- The income statement for Gaidar Company for 2014 and 2015 follows: GAIDAR COMPANY Income Statement 2014 2015 Sales 300,000 250,000 Cost of Goods Sold 192,000 150,000 Selling Expenses 30,000 24,000 Ad
- The following information is for Tide Corporation: ($ thousands) 2017 2016 Net sales $805,182 $456,779 Cost of goods sold 396,513 137,643 Determine the 2016 and 2017 common-size percents for the cost of goods sold using net sales as the base.
- ABCorp shows the following sales-related figures for its fiscal/calendar year 2020: Gross Revenues $1800 Credit Sales (Payable in 2021) 400 Costs of Items Sold (All units cost the same amount) 900 Returns (all returns cleaned at a cost of $100, and resto
- The 2016 income statement of Anderson Medical Supply reported net sales of $9 million , Cost of good sold of $5.2 million and net income of $820,000. Calculate Anderson's turnover ratios for 2018.
- The comparative balance sheets for 2018 and 2017 are given below for Surmise Company. Net income for 2018 was $80 million. SURMISE COMPANY Comparative Balance Sheets December 31, 2018 and 2017 ($ in
- Sales for the year for Victor Company were $1,000,000, 70 percent of which were on credit. The average gross profit rate was 45 percent on sales. Account balances follow:
- Skysong Corporation reported the following for 2017: net sales $1,227,100, cost of goods sold $725,600, selling and administrative expenses $330,700, and an unrealized holding gain on available for sa
- Marigold Co. reports the following information for 2017: Sales revenue $767,000 Cost of goods sold $529,400 Operating expenses $90,800 An unrealized holding loss on available-for-sale securities for 2017 of $52,500. It declared and paid a cash dividend of
- 1. Sellograph Corporation reports sales of $10 million for Year 2, with a gross profit margin of 40%. 20% of Sellograph's sales are on credit. | |Year 1 |Year 2 |Accounts receivable| $150,000| $170,00
- Flyer Company has provided the following information, prior to any year-end bad debt adjustment: Cash sales, $150,000 Credit sales, $450,000 Selling and administrative expenses, $110,000 Sales returns
- In 2018, Rondelli Company had net sales of $650,000, and the cost of goods sold of $455,000. Operating expenses were $150,000, and interest expense was $10,000. Rondelli prepares a multiple-step income statement. a. Compute the gross profit rate. b. Wha
- Geisel, Inc. reported net sales revenue of $529,000 in 2015 and $625,000 in 2016. The company's average net receivables were $125,000 during 2014 and $136,000 during 2015. At December 31, 2016, the co
- Dollar amounts in thousands except for per share data 2018 2017 2016 2015 2014 2013 NET SALES $244,524 217,799 191,329 165,013 137,634 NET SALES INCREASE
- A company has recorded bad debt expense in the past at a rate of 1.5% of net sales. In 2012, the company decides to increase its estimate to 2%. If the new rate had been used in prior years, cumulative bad debt expense would have been $380,000 instead of
- The following information is for Tide Corporation: ($ thousands) 2015 2014 Net sales $588,260 $439,000 Cost of goods sold 288,248 129,944 Determine the 2014 and 2015 trend percents for net sales usin
- During Burns company's first year of operations, credit sales totaled $140,000 and collections on credit sales totaled $105,000. Burns estimates that bad debt losses will be 1.5% of credit sales. By y
- The following information is for Tide Corporation: ($ thousands) 2017 2016 Net sales $803,338 $454,951 Cost of goods sold 394,621 135,683 Determine the 2016 and 2017 common-size percents for the cost of goods sold using net sales as the base.
- Waterway Co. reports the following information for 2017: sales revenue $776,200 cost of goods sold $517,000 operating expenses $90,200 an unrealized holding loss on available-for-sale securities for 2017 of $60,700. It declared and paid a cash dividend of
- At January 1, 2017, Martinez Company reported retained earnings of $1,974,000. In 2017, Martinez discovered that 2016 depreciation expense was understated by $432,000. In 2017, net income was $952,000
- Ayayai Corp. reported net income is $28,000; net sales is $422,000; and average assets is $617,000 for 2017. What is the 2017 profit margin?
- Nash Corporation reported the following for 2020: net sales of $1,237,000, cost of goods sold of $735,500, selling and administrative expenses of $322,100, and an unrealized holding gain on available for sale debt securities of $20,700. Prepare a stateme
- The current sections of Scoggin Inc.'s balance sheets at December 31, 2014 and 2015, are presented here. Scoggin's net income for 2015 was $151,230. Depreciation expense was $24,550 2015 2014 Current
- If, in 2017, an expenditure for repairs and maintenance is incorrectly treated as a purchase of a depreciable asset, which of the following statements is true? a. Net income in 2017 will be understated and depreciation expense in 2018 will be understated
- Russell Corporation uses the installment-sales method of accounting. The following information is available for 2014 and 2015: 2014 2015 Installment sales $900,000 $1,000,000 Cost of Installment sales $594,000 $680,000 Cash collection on 2012 sales $370,
- During 2020, ABC Company reported break-even sales dollars of $400,000, a contribution margin ratio of 40%, and a net income of $150,000. Calculate the dollar amount of sales revenue generated by ABC Company during 2020.
- Bramble Corporation reported the following for 2017: Net sales $1,231,600 Cost of goods sold $721,400 Selling and administrative expenses $329,500 Unrealized holding gains on available-for-sale securities $24,500 Required: a. Prepare a statement of compre
- Which of the following had the largest percentage change from 2014 to 2015: net sales; cost of sales; or selling, general, and administrative expenses? Show all computations. Financial Summary Target
- Ivanhoe Co. reports the following information for 2017: sales revenue $767,200, cost of goods sold $503,000, operating expenses $87,800, and an unrealized holding loss on available-for-sale securities for 2017 of $59,600. It declared and paid a cash divid
- Condensed financial data of Grouper Company for 2020 and 2019 are presented below. Cheyenne Company Income Statement For The Year Ended December 31, 2020 Sales revenue $6,670 Cost of goods sold 4,640 Gross margin 2,030 Selling and administrative expen
- For the current year, LeBombard Company's static budget sales were $225,000. Actual sales for the current year were $220,000. Actual sales last year were $219,000. Expected sales last year were $225,000. What is the static budget variance for sales in the
- At December 31, 2018, Stevenson Company overstated ending inventory by $32,000. How does this error affect the cost of goods sold and net income for 2018?
- At the end of the year, Stan Still Stationery Store had the following balances: Sales $630,000 Sales Discounts $2,580 Sales Returns and Allowances $15,000 Sales Salaries Expense $69,000 The Net Sales for the year are _____.
- Brown Company has the following account balances, extracted from its multiple-step income statement for the current year. Required: Compute the missing amounts. Sales $ Sales Returns and Allowances 4,200 Sales Discounts 3,000 Net Sales 104,200 Cost of
- Geisel, Inc. reported net sales revenue of $525,000 in 2015 and $625,000 in 2016. The company's average net receivables were $115,000 during 2014 and $120,000 during 2015. At December 31, 2016, the co
- Jamison Company prepared the following budgeted income statement for 2017: Jamison Company Budgeted Income Statement For the Year Ended December 31, 2017 Unit sales 1,100 Sales Revenue ($400 per unit) $440,000 Cost of Goods Sold (40% of sales) $176,000 G
- Pina Co. reports the following information for 2017: Sales revenue $752,600, Cost of goods sold $502,200, Operating expenses $81,200, and an unrealized holding loss on available for sale securities fo
- Bad debts expense is reported on the income statement as: a. part of cost of goods sold. b. an expense subtracted from net sales to determine gross profit. c. a contra revenue account. d. an operating expense
- Hill Industries had sales in 2016 of $7,600,000 and gross profit of $1,199,000. Management is considering two alternative budget plans to increase its gross profit in 2017. Plan A would increase the
- Hill Industries had sales in 2016 of $6,800,000 and a gross profit of $1,100,000. Management is considering two alternative budget plans to increase its gross profit in 2017. Plan A would increase th
- Gross sales equal: a. net sales minus sales discount. b. sales discount less net income. c. the total of cash sales and credit sales. d. net income plus gross profit.
- Information pertaining to Happy Company's budgeted sales revenue for the first quarter of the year is presented below. Management estimated that four percent of credit sales would be uncollectible. Of the collectible credit sales, 60% would be collected i
- The current sections of Scoggin Inc.'s balance sheets at December 31, 2019, and 2020, are presented here. Scoggin's net income for 2020 was $150,000. Depreciation expense was $23,000. 2020 2019 Curr
- Hahn Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $500,000 and credit sales are $2,000,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Hahn Company ma
- Kipling Company has sales of $1,500,000 for the first quarter of 2016. In making the sales, the company incurred the following costs and expenses. Calculate net income under CVP for 2016.
- Based on the following data for the current year, what is the inventory turnover? Net sales on account during year $517,500 Cost of merchandise sold during year 450,000 Accounts receivable, beginning
- Based on the following data for the current year, what is the inventory turnover? Net sales on account during year | $700,000 Cost of merchandise sold during year | $270,000 Accounts receivable, begin
Explore our homework questions and answers library
Browse
by subject