On December 31, 2014, Colonial Corporation had the following account balances related to credit sales and receivables prior to recording adjusting entries:
Accounts receivable...........................$25,000
Allowance for doubtful accounts ...........200 credit balance
Sales revenue (all credit sales)...............400,000
Required:
Prepare the necessary year-end adjusting entry related to uncollectible 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. Assume the same information presented in part A. except that prior to adjustment, the allowance for doubtful accounts had a debit balance of $200 rather than a credit balance of $200.
C. It is estimated that a provision for bad debts is required for 1% of credit sales for the year.