Comparison of Bad Debt Estimation Methods The following information (prior to adjustment) is available from the accounting records of the Bradford Company on December 31, 2007:
|
Cash sales |
$93,100 |
|
Net credit sales |
262,900 |
|
Total sales (net) |
$356,000 |
|
Accounts receivable |
126,300 |
|
Allowance for doubtful accounts |
2,150 (credit) |
Required
Prepare journal entries to record the estimate of Bradford’s bad debt expense for 2007 assuming:
1. Bad debts are estimated to be 1.5% of total sales (net).
2. Bad debts are estimated to be 2% of net credit sales.
3. Bad debts are estimated to be 5% of gross accounts receivable.