My sales are very bad, what should I do?

Bad debts expense with allowance method with a/r and credit sales?

• At December 31 of the current year, a company reported the following: Total sales for current year: $780,000 includes $160,000 in cash sales. Accounts receivable balance at Dec. 31, current year: $190,000 Bad debts written off during the current year: $6,800 Balance of Allowance for Doubtful Accounts at January 1, current year: $8,300 Prepare the necessary adjusting entries to record bad debts expenses assuming this company's bad debts are estimated to equal: a. 1.5% of credit sales b. 5% of accounts receivable. Show the calculations, journal entries and resulting ‘T’ Accounts (Record answers in Space Below) Debit Cash 160,000 Credit Sales 780,000 Credit Allowance 8,300 Debit A/R 190,000 Debit A/R 780,000 Credit A/R 160,000 Credit A/R 6,800 So I was getting a total of $794,900 for a/r that just doesn’t feel right. Can anyone can critique my work? And I know for the credit sales I have to do the current year times 1.5% and I will get bad debt expense So that would be 780,000 times 1.5% which equals 11,700 Dr. Bad Debt Expense 11,700 Cr. Allowance (11,700) Alright for A/R I did 5% x 190,000 = 9,500 But since there was a balance of 8,300 before 9,500-8,300=1,200 DR. Bad Debt Expense 1,200 Cr. Allowance (1,200) Alright does this math seem wrong and I missing something. Y’alls help will greatly be apperciated

• Answer:

  ok y'all - here goes............ Entry to record sales Dr Cash 160,000 Dr A/R 620,000 Cr Sales 780,000 Entry to reflect ending balance of A/R of 190,000 Dr Cash 430,000 Cr A/R 430,000 Entry during the year to reflect bad debt write-off Dr Bad Debt Exp 6,800 Cr Allowance 6,800 Now..... The credit sales = total sales less cash sales = 780,000-160,000 = 620,000 So allowance for credit sales = 1.5% x 620,000 = 9,300 A/R allowance = 190,000 x 5% = 9,500 Now, as there was already a balance of 8,300 in the account and 6,800 had already been written off during the year the adjustment would be 9,300+9,500-6,800-8,300 = 3,700 or Dr Bad Debt Exp 3,700 Cr Allowance 3,700 which would leave a balance of 12,000 in the account (9,300+9,500-6,800) ...I don't know....seems ok to me...what do YOU think?