Bad Bhoyzz had the following amounts on its unadjusted trial balance at December 31, 2020:

Trial balance

The company uses the percentage-of-sales approach to account for uncollectible accounts. The companys past experience indicate that bad debts average 2% of sales revenue.

REQUIRED:

Prepare the December 31, 2020 adjusting journal entry for uncollectible accounts.

It is now July 23, 2021 and the company has just received word that one of its customers owing $1,000 will be unable to pay the amount owing because the customer has gone out of business due to financial problems. Prepare the journal entry to write off the account.

Credit Debit 100,000 Accounts receivable Allowance for doubtful accounts Sales revenue 400 900,000