Complete journal entries for the following transactions related to accounts receivable and the allowance for doubtful accounts:
1. Sales for the month of June were $75,000. Using a percentage allowance method of 1% record the allowance for doubtful accounts.
2. On June 30, it was determined that two customers with receivables totaling $980 were not likely to pay.
3. On July 15, surprisingly one of the customers who owed $400 and was written off on June 30, paid their bill.
4. On July 31, our fiscal year ends, the allowance for doubtful accounts has a balance of $1,780
The company uses an aging method to calculate the desired allowance balance.
An accounts receivable aging shows the following:
30 days or less = $68,500
31 -60 days = $10,400
61-90 days = $4,300
Over 90 days = $1,200
The company wants an ending reserve equal to:
30 days or less = 1%
31-60 days = 3%
61-90 days = 5%
over 90 days = 15%