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Patagonia Corp.'s unadjusted trial balance included the following:
Debit Credit
Accounts receivable.................................................................. $140,000
Allowance for doubtful accounts........................................... $890
Sales............................................................................................. 425,000
Sales returns and allowances................................................. 10,000
Instructions
Question a) Prepare adjusting journal entries assuming that the estimate of uncollectibles is determined by using 4% of gross accounts receivable.
Question b) Prepare adjusting journal entries assuming that the estimate of uncollectibles is determined by using 1.5% of net sales.
Financial Statement Analysis and Preparation
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