(Question 1)
Total credit sales : $2,500,000
Accounts receivable at December 31: 970,000
Bad debts written off : 66,000
a) Assume that Hamilton Company estimates its bad debts expense based on 7% of accounts receivable. What amount of bad debts expense will Hamilton record if it has an Allowance for Doubtful Accounts credit balance of $3,000?
b) Assume that Hamilton Company estimates its bad debts expense based on 7% of accounts receivable. What amount of bad debts expense will Hamilton record if it has an Allowance for Doubtful Accounts debit balance of $3,000?
(Question 2)
On April 2, Julie Keiser uses her JCPenney Company credit card to purchase merchandise from a JCPenney store for $1,500. On May 1, Keiser is billed for the $1,500 amount due. Keiser pays $900 on the balance due on May 3. On June 1, Keiser receives a bill for the amount due, including interest at 1% per month on the unpaid balance as of May 3. Prepare the entries on JCPenney Co.'s books related to the transactions that occurred on April 2, May 3, and June 1.
What are the May 3 and June 1 account titles and amounts?