Assume Grandmas Cookie Company uses the aging method and estimates uncollectable accounts using the following percentages for each group of days outstanding: 0% for 0-30 days, 10% for 31-60 days, 20% for 61-90 days, and 50% for 90+ days. The Allowance for Doubtful Account at Grandmas Cookie Company has a credit balance of $1,000 prior to any adjustment.

June Accts. Rec.	Current	Past Due
Days Outstanding	0-30	31-60	61-90	90+
Amount	$40,000	$20,000	$5,000	$4,000

1.) (MULTIPLE CHOICE)

What is the journal entry for bad debt for June? (8 points)

1. DR Bad Debt Expense 5,000

CR Allowance for Doubtful Accounts 5,000

2. DR Bad Debt Expense 2,000

CR Allowance for Doubtful Accounts 2,000

3. DR Bad Debt Expense 4,000

CR Allowance for Doubtful Accounts 4,000

4. DR Allowance for Doubtful Accounts 5,000

CR Bad Debt Expense 5,000

5. DR Allowance for Doubtful Accounts 2,000

CR Bad Debt Expense 2,000

6. DR Allowance for Doubtful Accounts 4,000

CR Bad Debt Expense 4,000

2.) (MULTIPLE CHOICE)

What is the ending balance in the Allowance for Doubtful Accounts, account? (5 points)

	4,000
	1,000
	5,000
	2,000

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Now, assume Grandmas Cookie Company uses the 2% of current period credit sales method to estimate its bad debts. The Allowance for Doubtful Account at Grandmas Cookie Company has a credit balance of $200 prior to any adjustment.

June Accts. Rec.	Current	Past Due
Days Outstanding	0-30	31-60	61-90	90+
Amount	$40,000	$20,000	$5,000	$4,000

1.) (MULTIPLE CHOICE)

What is the journal entry for bad debt for June? (8 points)

1. DR Allowance for Doubtful Accounts 800

CR Bad Debt Expense 800

2. DR Allowance for Doubtful Accounts 1,000

CR Bad Debt Expense 1,000

3. DR Allowance for Doubtful Accounts 200

CR Bad Debt Expense 200

4. DR Bad Debt Expense 800

CR Allowance for Doubtful Accounts 800

5. DR Bad Debt Expense 1,000

CR Allowance for Doubtful Accounts 1,000

6. DR Bad Debt Expense 200

CR Allowance for Doubtful Accounts 200

2.) (MULTIPLE CHOICE)

What is the ending balance in the Allowance for Doubtful Accounts, account? (5 points) credit balance 200

	200
	1,000
	2,000
	800