Reference no: EM132745337

Question - It is month end and you are estimating the balances for Allowance for Doubtful Accounts and Bad Debt Expense. See information below:

Cash sales for the month $100,000

Sales for the month $250,000

Sales for the month $350,000

Accounts Receivable at End of Month $150,000 DR

Allowance for doubtful accounts at end of month $7,500 CR

*Balance before you've made the adjusting journal entry for month end.

Determine what month end adjusting entries are required for each of the independent scenario:

A) Income Stmt Approach - Bad Debt Expense is computed as 2% of credit sales for the month.

B) Balance Sheet Approach - Allowance for Doubtful Accounts ending balance is estimated to be 8% of total Accounts Receivable at End of Month.

As well as Prepare the journal entries to record the following transactions:

Jan 15 - The Accounts Receivable Department at the company has been unable to get a hold of Mr. Welch. He appears to have changed phone numbers, mailing address, and no one can seem to track him down. He has an outstanding balance of $1,000.

Jun 3 - After a thorough search, you have now tracked Mr. Welch down and remind him of the outstanding balance. Mr. Welch was able to make a $700 payment and you have agreed to not pursue the remaining $300.