The ledger of G.K. Reid Company at the end of the current year shows Accounts Receivable $120,000, Sales Revenue $840,000, and Sales Returns and Allowances $30,000.
Instructions
(a) If G.K. Reid uses the direct write off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming G.K. Reid determines that L. Gaga’s $1,400 balance is uncollectible.
(b) If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1% of net sales, and (2) 10% of accounts receivable.
(c) If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable.