Problem
Rogala Foods, Inc. sells Oscar Mayer, Jell-O, Tassimo, and many other food brands. The company reported the following rounded amounts as of December 29, 2012 (all amounts in millions):
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Debits
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Credits
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Accounts Receivable
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$
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Allowance for Doubtful Accounts
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35
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Sales (assume all on credit)
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18,700
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Required:
Prepare the adjusting journal entry required at December 31, 2012, for recording Bad Debt Expense.
(i) Assume Rogala uses 1/4 of 1 percent of sales to estimate its Bad Debt Expense for the year.
(ii) Assume instead that Rogala uses the aging of accounts receivable method and estimates that $84 of its Accounts Receivable will be uncollectible.