Reference no: EM132479053

Uncollectible accounts

Aaron Servicing showed the following partial unadjusted results at October 31, 2020, its year-end:

AccountDebitCreditSales $1,740,000

Accounts receivable$157,000

Allowance for doubtful accounts 3,200

Part 1

Required:

Question a. Assuming Aaron estimates bad debts to be 1.5% of sales, prepare the adjusting entry at October 31, 2020

Question b. Show how accounts receivable would be shown on the October 31, 2020, balance sheet using your calculations in (a).

Part 2

Required:

Question c. Instead of (a), assume that Aaron estimates bad debts to be 5% of outstanding accounts receivable. Prepare the adjusting entry at October 31, 2020.

Question d. Show how accounts receivable would be shown on the October 31, 2020, balance sheet using your calculations in (c).