Reference no: EM131764136
Mesa Camping Equipment Company's balance sheet dated December 31, 2013 reported Accounts Receivable of $400,000 and a credit balance in Allowance for Doubtful Accounts of $32,000. During 2014, Mesa Camping Equipment had the following transactions: sales on account $1,500,000; sales returns and allowances, $50,000; collections from customers, $1,250,000; accounts written off $36,000; previously written off accounts of $6,000 were collected.
Instructions
(a) Prepare the journal entries for the 2014 transactions.
(b) If the company uses the percentage of sales basis to estimate bad debts expense and anticipates 3% of net sales to be uncollectible, what is the adjusting entry at December 31, 2014?
(c) If the company uses the percentage of receivables basis to estimate bad debts expense and determines that uncollectible accounts are expected to be 8% of accounts receivable, what is the adjusting entry at December 31, 2014?
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