Harris Company uses the allowance method of handling its credit losses. It estimates credit losses at one percent of credit sales, which were $2,700,000 during the year. On December 31, the Accounts Receivable balance was $450,000 and the Allowance for Doubtful Accounts had a credit balance of $30,600 before adjustment.

Prepare the adjusting entry to record the credit losses for the year.

Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear in the December 31 balance sheet.

a.

General Journal
Date Description Debit Credit
Dec.31 AnswerBad Debts ExpenseAllowance for Doubtful Accounts Answer Answer
AnswerBad Debts ExpenseAllowance for Doubtful Accounts Answer Answer
To record allowance for credit losses.

b. (Do not use negative signs with your answers.)

Current Assets:
AnswerAccounts ReceivableLess: Allowance for Doubtful Accounts $Answer
AnswerAccounts ReceivableLess: Allowance for Doubtful Accounts Answer
$Answer

Dec.31           Bad Debts Expense    27000

December 31    Balance Sheet Accounts Receivable             392400

Explanation:

Harris Company

Credit Sales for the current year $2700,000

Credit Losses = 1% of $ 2700,000= $ 27000

Add Allowance for Doubtful Accounts $ 30600 Cr

Required Adjustments          $ 57,600 Cr

General Journal

Date                     Description            Debit                Credit

Dec.31           Bad Debts Expense    27000

                         Allowance for Doubtful Accounts   27000

December 31 Balance Sheet.

                       Accounts Receivable      $450,000        

Less: Allowance for Doubtful Accounts $57,600 ( 27000+ 30,600)

                      Accounts Receivable             392400

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know