Problem:
The following information was abstracted from the records of the Hooper Corporation:
Accounts Receivable, December 31, 2011 ............ $ 590,000
Allowance for Doubtful Accounts before adjustment,
December 31, 2011 ............................... 18,000 (dr)
Sales--2011........................................ 2,180,000
Sales Discounts--2011 ............................. 18,000
Sales Returns--2011 ............................... 27,000
Prepare the adjusting entry for doubtful accounts expense under each of the following assumptions:
(1) 3 percent of outstanding accounts receivable are uncollectible.
(2) 1.5 percent of 2011 net sales are uncollectible.
(3) An aging schedule of the accounts shows that $21,400 of the accounts are uncollectible.