Reference no: EM132844059

The account balances of Blossom Company at December 31, 2021, the end of the current year, show Accounts Receivable $216,000; Allowance for Doubtful Accounts $2,600 (credit); Sales $1,694,000; Sales Returns and Allowances $50,000; and Sales Discounts $24,000.

Problem 1: Record the adjusting entry at December 31, 2021, assuming bad debts are estimated to be (1) 10% of accounts receivable, and (2) 1.5% of net sales.

Problem 2: Calculate the carrying amount of the accounts receivable for each approach to estimating uncollectible accounts in part (a) above.

Problem 3: Assume instead that the Allowance for Doubtful Accounts had a debit balance of $3,100 at December 31, 2021. What is bad debt expense for 2021, and what is the carrying amount of the accounts receivable at December 31, 2021, assuming bad debts are estimated to be (1) 10% of accounts receivable, and (2) 1.5% of net sales?