At December 31, 2007, the trial balance of Nora Company contained the fol- Journalize entries to record lowing amounts before adjustment. pote related to bad ebts.

Debits Credits (SO 2, 3)

Accounts Receivable $250,000 Allowance for Doubtful Accounts $ 1,500 Sales 875,000 Instructions

(a) Prepare the adjusting entry at December 31, 2007, to record bad debts expense assuming that the aging schedule indicates that $11,800 of accounts receivable will be uncollectible.

406 CHAPTER 8 _ Reporting and Analyzing Receivables Journalize various receivables transactions.

(S@Mlhe2;. 455)

Explain the impact of transactions on ratios.

(SO 8)

Cae Prepare entries for various credit card and notes receivable transactions.

(SO 2, 4, 5, 6, 9)

(b) Repeat part

(a) assuming that instead of a credit balance there is a $1,500 debit balance in the Allowance for Doubtful Accounts.

(c) During the next month, January 2008, a $2,200 account receivable is written off as uncollectible. Prepare the journal entry to record the write-off.

(d) Repeat part

(c) assuming that Nora Company uses the direct write-off method instead of the allowance method in accounting for uncollectible accounts receivable.

(ce) ==> what are the advantages of using an aging schedule and the allowance method in accounting for uncollectible accounts as compared to the direct write-off method?