Determining the direct write-off method

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Reference no: EM131828645

Question: The ledger of Macarty Company at the end of the current year shows Accounts Receivable $78,000, Credit Sales $810,000, and Sales Returns and Allowances $40,000.

Instructions: (a) If Macarty uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Macarty determines that Matisse's $900 balance is uncollectible.

(b) If Allowance for Doubtful Accounts has a credit balance of $1,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 10% of accounts receivable.

(c) If Allowance for Doubtful Accounts has a debit balance of $500 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 8% of accounts receivable.

Reference no: EM131828645

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