ABC corp provided $10,000 worth of services in March 2018 on account. The customers have time until June 2018 to

pay the balance. The company estimates that based on prior experience $800 of the sales made in this period will not

be collectible.

Analyze the following.

Part 1: Make the journal entry for recording the sale and bad debt expense in March 2018. Explain why the bad debt

expense should be recorded in March 2018. Show income statement for the month of March 2018, assuming no

other expenses were incurred to provide services. Also show the Balance sheet. What is net realizable value of AR

as of 31 March 2018.

Part 2: What is the net realizable value of AR on April 1st 2018. During the month of April 2018 customer X , who is

one of the customers to whom services were provided in March 2018 , reports to the company that he has gone

bankrupt and will not be able to pay his balance of $300. Record JE, show Income statement for month of April 2018

and B/S. What is the net realizable value of AR as of 30 April 2018. Explain why the net realizable value of AR does

not change due to the write off.

Part 3: In May 2018 Assume Customer Y who is one of the customers to whom services were provided in March

2018 reports to the company that he will not be able to pay his balance of $ 100. Record the JE , show the Income

statement for month of May 2018 and Balance sheet

Part 4 : In June 2018 the company makes additional credit sales of $50,000 and anticipates that it would need to

maintain a closing balance of $ 1000 in their Allowance for doubtful accounts. How much additional bad debt expense

would they need to provide for in June 2018. Make the adjusting journal entry to record the bad debt expense for the

month of June. Also make the Income statement for month of June and the balance sheet

2.