The ledger of Elburn Grill at the end of the current years shows Accounts Receivable $110,000; Sales $840,000; and Sales Returns and Allowances $28,000.
Instructions
(a) If Elburn uses the direct write off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Elburn determines that Capp’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 percent of net sales and (2) 10 percent of accounts receivable.
(c) If Allowance for Doubtful Accounts has a debit balance of $200 in the trail balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75 percent of net sales and (2) 6 percent of accounts receivable.