Question - The ledger of Garcia Company at the end of the current year shows Accounts Receivable $96,000; Credit Sales $780,000; and Sales Returns and Allowances $40,000.
Instructions -
(a) If Garcia uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Garcia determines that Allied's $900 balance is uncollectible.
(b) If Allowance for Doubtful Accounts has a credit balance of $1,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 10% of accounts receivable.
(c) If Allowance for Doubtful Accounts has a debit balance of $500 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 8% of accounts receivable.