Journal entries to record estimated bad debt in different methods.
Starr Company had the following information relating to credit sales for 2006:
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Accounts receivable balance, December 31, 2006
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$20,000
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Beginning balance in Allowance for Doubtful Accounts
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$600 cr.
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Net credit sales during 2006
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$95,000
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1. Prepare the journal entry to record estimated bad debt when:
a. Percentage of sales method is used and 3% of sales are determined to be uncollectible
b. Accounts receivable method is used and $3,400 has been determined to be uncollectible
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Account
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Debit
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Credit
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Dec. 31
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1a
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1b
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2. Using the accounts receivable method:
a. Calculate the amount reported as net receivables:
b. If a bad debt of $1,000 was actually written off, calculate the amount that would be reported as net receivables:
3. Calculate the amount reported as net receivables using the percentage of sales method