Reference no: EM132617851

The December 31, 2007 balance sheet of Quayle Company had Accounts Receivable of $500,000.

During 2008, the following transactions occurred:

sales on account $1,400,000;

sales returns and allowances, $50,000;

collections from customers, $1,150,000;

accounts written off $35,000;

previously written off accounts of $5,000 were collected.

Required:

Problem (a) Journalize the 2008 transactions.

Problem (b) If the company uses the percentage of sales basis to estimate bad debts expense and expect 2% of net sales to be uncollected, what is the adjusting entry at December 31, 2008?