1. Arlington Cycle Company began operations on Jan 1, 2014. The company reported the following selected items in its 2015 financial report: 2015 2014 Gross Sales $1,400,000 $1,500,000 Accounts Receivable 600,000 650,000 Actual bad debt write-offs 26,000 10,000 Arlington estimated bad debts at 2% of gross sales. Analyze the activity in the Allowance for Doubtful Accounts T-account, and comment on whether the bad debt estimate has been sufficient to cover the write-offs.
2. In its 2014 financial report, Unsound Limited reported the following items: 1. A credit balance of $200,000 in Allowance for Doubtful Accounts. 2. Sales of $3,250,000 During 2014, the company had the following transactions related to Allowance for Doubtful Accounts. 1. Wrote off accounts consi