Question - Account Receivable Entries - The following financial information pertains to Sleepy Company:
Accounts Receivable 12/31/11 $275,000
Allowance for bad debt 12/31/11 $8,400
Net Credit Sales 2012 $1,980,000
Collect on credit sales during 2012 $1,730,000
Accounts receivable written off in 2012 $6,500
Required:
a. Prepare all the necessary journal entries for 2012 sales, collections, and write-offs (using the direct write-off method).
b. (i) Using the allowance method, prepare 2012 journal entries to record write-offs and to estimate bad debt expense assuming bad debt expense is estimated on a percentage of net credit sales approach.
(ii) Using the allowance method, prepare 2012 journal entries to record write-offs and to estimate bad debt expense assuming bad debt expense is estimated on a percentage of accounts receivable approach.