Allowance Method

Mike uses the allowance method. The balance of the Allowance for Doubtful Accounts at December $1$ was $$950.$ The following transactions

occurred:

Dec $12$ Mike determines that it cannot collect $$1,500$ of its accounts receivable from Lilo Company

$27$ Lilo unexpectedly pays $$200$ on its account. Jada records its recovery of this bad debt.

Instructions:

$(1)$ Prepare journal entries for the above transactions under the applicable method.

$(2)$ Post the transactions above and determine the ending balance in Allowance for Doubtful Accounts.

$(3)$ Assuming bad debts are expected to be $5\%$ of accounts receivable, prepare the adjusting journal entry at December $31.$

$(1)$ Prepare journal entries for the above transactions under the applicable method.