Problem:
At December 31, 2008, Aaliyah Company records show the following results for the calendar -year:
cash sales $ 1,591, 700
credit sales 2,389,000
In addition, its unadjusted trial balance includes the following items:
accounts receivable $ 1,630,846 debit
allowance for doubtful accounts 12,650 debit
Requirement 1:
Prepare the adjusting entry for Aaliyah Co. to recognize bad debts under each of the following independent assumptions
a. bad debt are estimate to be 2% of credit sales.
b. bad debt are estimated to be 3% of total sales.
c. an aging analysis estimates that 5% of the year-end accounts receivable are uncollectible.