Which method-recording bad debts at the time of sale

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Problem - Estimation versus Direct Write-Off of Bad Debts Blunt Company makes credit sales of $21,000 during the month of February 2019. During 2019, collections are received on February sales of $20,400, accounts representing $600 of these sales are written off as uncollectible, and a $100 account previously written off is collected.

Required -

1. Prepare the journal entries necessary to record the preceding information if

(a) bad debts are estimated as 3% of credit sales at the time of sale and

(b) the bad debts are recorded as they actually occur.

2. Which method-recording bad debts at the time of sale or when they actually occur-is preferred? Why?

Reference no: EM132882159

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