Bella Company has provided the following partial unadjusted trial balance for its just ended fiscal year

Bella company

Partial Trial Balance

April 30,2016

Debit Credit

Cash & Cash Equivalents $320,000

Accounts Receivable 500,000

Allowance for Doubtful Accounts $7,500

Merchandise Inventory 250,000

Other current assets 96,000

Sales 1,200,000

Sales discounts 18,000

Sales returns and allowances 24,000

Cost of goods sold 750,000

Selling expenses 169,050

a) Assume that the company estimates its bad debts as 1.20% of its net sales.

(i) Record the adjusting entry to record the bad debts expense.

(ii) Prepare a T-account showing the ending balance in the allowance for Doubtful Accounts account.

(iii) Show how the accounts receivable will appear on the balance sheet.

b) Assume that the company estimates its bad debts as 4.00% of its accounts receivable.

(i) Prepare a T-account showing the ending balance in the balance in the allowance for Doubtful Accounts account.

(ii) Record the adjusting entry to record the bad debts expense.

(iii) Show how the accounts receivable will appear on the balance sheet