YEAR X1 The allowance for doubtful accounts on 1-1-x1 had a credit balance of $25,000. On 3-1-x1 wrote off a receivable for $12,000. On 5-1-X1 wrote off a receivable for $10,000. On 8-4-X1 a customer previously written off in a prior year agreed to pay. The amount due was $3,000 and the cash was received on 8-4-x1.
On 12-31-X1 the ending balance in the Accounts Receivable account was $525,000. Net credit sales for the year were $6,550,000. The company uses the percent of credit sales method and has had a bad debt rate of .005 (use number as is).
Answer the following (% credit sales method):
1. Do the journal entry for the write off on 3-1-x1
2. Do the journal entry for the write off on 5-1-x1
3. Do the journal entry for the recovery on 8-4-x1
4. Do the journal entry needed at year-end to record the bad debt estimate (% of net credit sales method).
5. What is the ending balance in the Allowance for doubtful accounts on 12-31-x1 (using the credit sales method)