On December 31, 1990, Defore Corporation's unadjusted trial balance included the following items:

\section*{Required}
1. Prepare the adjusting entry on the books of Defore Corporation to estimate bad debts under each of the following independent assumptions:

a. Bad debts are estimated to be \(2 \%\) of total sales.

b. Bad debts are estimated to be \(3.5 \%\) of credit sales.

c. An analysis suggests that \(7.5 \%\) of outstanding accounts receivable on December 31, 1990, will become uncollectible.
2. Show how Accounts Receivable and Allowance for Doubtful Accounts would appear on the December 31, 1990, balance sheet given the facts in 1. \(b\) above.
3. Show how Accounts Receivable and Allowance for Doubtful Accounts would appear on the December 31, 1990, balance sheet given the facts in 1. \(c\) above.

Transcribed Image Text:

Debit Credit Cash sales. 360,000 Credit sales 585,000 Accounts receivable 210,000 Allowance for doubtful accounts 200