At December $31,$ its annual year$-$end, the accounts of Sun Systems Inc. show the following.

$1.$ $$288,000$ in sales revenue for the year, of which one$-$sixth was on account.

$2.$ $$1,440$ credit balance in Allowance for Doubtful Accounts, as of December $31$ of the prior year.

$3.$ $$28,880$ debit balance in Accounts Receivable as of December $31$ of the current year $($prior to any write$-$offs

of uncollectible accounts during the current year$).$

$4.$ $$1,680$ in uncollectible accounts to be written off as of December $31$ of the current year.

$5.$ Aging schedule at December $31$ of the current year, showing the following breakdown of total accounts recievable excluding amounts to be written off.

Status Amount

No Past Due Remainder

Past due $160$ days $$6,400$

Past due over $60$ days $4,800$

Estimating and Recording Bad Debt Estimates and Write$-$Offs; Reporting of Accounts Receivable

At December $31,$ its annual year$-$end, the accounts of Sun Systems Inc. show the following.

$$288,000$ in sales revenue for the year, of which one$-$sixth was on account.

$$1,440$ credit balance in Allowance for Doubtful Accounts, as of December $31$ of the prior year.

$$28,880$ debit balance in Accounts Receivable as of December $31$ of the current year $($prior to any write$-$offs

of uncollectible accounts during the current year$).$

$$1,680$ in uncollectible accounts to be written off as of December $31$ of the current year.

Aging schedule at December $31$ of the current year, showing the following breakdown of total accounts receivable

excluding amounts to be written off.

Required

a$.$ Prepare the entry to write off the uncollectible accounts.

b$.$ Prepare the adjusting entry on December $31$ to record bad debt expense for each of the following separate assumptions

concerning expected bad debt loss rates. Note: Treat each situation separately.

Bad debt expense is based on $1\mathrm{.}5\%$ of credit sales.

Allowance for doubtful accounts is based on $2\mathrm{.}5\%$ of total receivables at year$-$end.

Allowance for doubtful accounts is based on the following aging schedule: Not past due, $0\mathrm{.}5\%$; Past

due $1-60$ days, $1\%$; and Past due over $60$ days, $8\%.$

Bad debt expense is based on the direct write$-$off method $($assume entry in part a has not been recorded$).$ Bad debt expense is based on the direct write$-$off method $($assume entry in part a has not been recorded$).$

c$.$ Prepare the balance sheet disclosure showing accounts receivable less the allowance for doubtful accounts for each assumption $1$

through $4$ of part b$.$ For assumption $4$ only, assume there is a zero balance in the allowance for doubtful accounts on December $31$ of

the prior year.

d$.$ For reporting purposes in looking at part $b,$ what is one limitation when using assumption $1$ and when using assumption $4?$

Note: Do not use negative signs with any of your answers.