Reference no: EM132743005

Balance per the bank statement is $11,240.

1. Balance per books is $10,200.
2. Check #506 for $1,200 and check #510 for $900 were not shown on the October 31, 2020 bank statement.
3. A deposit of $3,110 had not been received by the bank when the bank statement was prepared.
4. A bank debit memo indicated an NSF check for $85 written by a customer, Maddie Wolfe, to Ashley Company on October 13.
5. A bank credit memo indicated a note was collected by the bank for $2,155.
6. The bank statement indicated service charges of $20.

December 31: The company uses the Percent of Sales method to determines its Bad Debts Expense.

1. The company has determined that 1% of Net Credit Sales should be recorded to Bad Debts Expense.
2. Net Credit Sales is $1,000,000.
3. The balance in Accounts Receivable is $812,000.
4. The balance in Allowance for Bad Debts is $8,500 (credit).

Problem 1: How to show the journal entry to record Bad Debts Expense.