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Record journal entries for collection of written-off account

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Reference no: EM132737710

The following data relates to Medicore Inc. for the year 2020:

Credit sales for 2020: $6,500,000

Sales returns and allowances for 2020: $300,000

Accounts receivable as at Dec. 31, 2020: $750,000

Allowance for doubtful accounts as at Jan. 1, 2020: $18,000

Medicore estimates its bad debt expense during the year as 0.2% of net credit sales. On May 15, 2020, Medicore unexpectedly collected $10,000 of a previously written-off account.

Required:

Problem 1: Record the journal entries for:The collection of the previously written-off account on May 15; Bad debt expense for the year.

Problem 2: After the journal entries from a) had been completed, management reviewed the balance in the allowance for doubtful accounts, and determined that it should be 5% of gross accounts receivable. Prepare the adjusting journal entry required.

Reference no: EM132737710

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