Reference no: EM132529701

Question - The December 31, 2015 balance sheet of Barone Company had Accounts Receivable of $400,000 and a credit balance in Allowance for Doubtful Accounts of $32,000. During 2016, the following transactions occurred:

1) Sales on account $1,500,000; sales returns and allowances, $50,000;

2) Collections from customers, $1,250,000;

3) Accounts written off $36,000;

4) Previously written off accounts of $6,000 were collected.

Instructions -

(a) Journalize the 2016 transactions.

(b) If the company uses the percentage-of-sales basis to estimate bad debt expense and anticipates 3% of net sales to be uncollectible, what is the adjusting entry at December 31, 2016?

(c) If the company uses the percentage of receivables basis to estimate bad debt expense and determines that uncollectible accounts are expected to be 8% of accounts receivable, what is the adjusting entry at December 31, 2016?