Question - On December 31, 2009 Colonial Corporation had the following account balances related to credit sales and receivables prior to recording adjusted entries:
Accounts receivable $25,000
Allowance for doubtful accounts 200 (credit)
Sales revenue (all credit sales) 400,000
Required: Present the necessary year-end adjusting entry related to uncollected accounts for each of the following independent assumptions:
A. An aging of accounts receivable is completed. It is estimated that $2,150 of the receivables outstanding at year-end will be uncollectible.
B. It is estimated that 1% of credit sales for the year will prove to be uncollectable.
C. Assume the same information presented in 1. above exept that prior to adjustment, the Allowance for Doubtful Accounts had a debit balance of $200 rather than a credit balance of $200.