Prepare the estimated bad debts

Reference no: EM13142307

The trial balance before adjustments of pratt company reports the following balances:

Accounts receivable (debit) 100000

Allowance for doubtful accounts (credit) 2500

Sales (all on credit) 650,000(credit)

Sales Returns and allowances (debit) 40,000

a. Prepare the estimated bad debts assuming that doubtful accounts are estimated to be (1) 7% of gross accounts receivable and (2) 1% of net sales

b. Assume that all the information above is the same except that the allowance for doubtful accounts has a debit balance of 2500 instead of a credit balance how will this difference affect the journal entries in part (a)

Reference no: EM13142307

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