At the beginning of March, Paragon Limited, which records adjusting entries at the end of each month, had accounts receivable of $30,000 and an allowance for doubtful accounts of $5,000. During March, the company had credit sales of $40,000 and collected $35,000 from customers. It also wrote off a certain amount of uncollectible receivables during the month and recorded a certain amount of bad debts expense at the end of the month. No accounts that were written off during the month were subsequently recovered. At the end of March, aft er all journal entries had been recorded and posted, the balance in Accounts Receivable was $32,000 while Allowance for Doubtful Accounts had a balance of $4,500.

Instructions

(a) Prepare T accounts for Accounts Receivable and Allowance for Doubtful Accounts. Post the above transactions and determine the missing amounts for the write off of uncollectible receivables and bad debts expense.

(b) Prepare the journal entry that would have been made by the company to write off uncollectible receivables during March.

(c) Prepare the journal entry that would be made by the company to record bad debts expense for the month of March.