Santa Maria Widget reviewed the following information from its accounting records for the year ended December 31, 2011, before adjustment:Sales during 2011$800,000Credit Sales are 80% of salesCollections from customers in 2011590,000Accounts Receivable 165,000Allowance for Uncollectible Accounts (before adjustment)2,050 credit Santa Maria Widget uses the percent-of-sales method, at 1.5%, to estimate uncollectible accounts for 2011. The president of the company wants to change to the aged accounts receivable method and estimates $7,500 as the uncollectible amount for 2011.
For each method of determining the estimate amount, you are to provide:
1. the adjusting Journal entry.
2. the ending balance in the Allowance account.
3. the net realizable value of accounts receivable.
my answer was:
1) Bad Debt Expense $9,600
Allowance for uncollectible accounts $9,600
2) Ending balance in allowance account $11,650
3)Net realizable value of accounts recievable $153, 350
But my teacher said:
Your numbers are correct for the Percent of Credit Sales Method, but you omitted the journal entry.
Also, you did not submit anything for the Aged AR method.
help please?