Problem: Chaney Ltd. started business several years ago. For the year ended December 31, 2010, the following information (before adjustments) is available:
Accounts Receivable 56,000
Allowance for Doubtful Accounts 350
Sales (all on account) 195,700
Sales Discounts 1,800
All accounts have normal balances
Required:
Prepare entries for each of the following selected transactions:
Q1. Management estimated uncollectible customer accounts to be 1.5% of net credit sales. Prepare the December 31, 2010 adjusting entry to estimate uncollectible accounts.
Q2. On March 15, 2011, a $1,750 account receivable for customer Donovan Watson was determined to be uncollectible and was written off.
Q3. For 2011, management estimated uncollectible customer accounts to be 5% of outstanding account receivable. Prepare the December 31, 2011 adjusting entry to estimate uncollectible accounts assuming accounts receivable balance at this date is $75,000.