Ch.9

1-Jameel Company applies the direct write-off method in accounting for uncollectible accounts.March11Jameel determines that it cannot collect $8,100 of its accounts receivable from its customer Labib Company.

29Labib Company unexpectedly pays its account in full to Jameel Company. Jameel records its recovery of this bad debt.

Prepare journal entries to record the above selected transactions of Jameel.

2-At year-end (December 31), Chams Company estimates its bad debts as 0.30% of its annual credit sales of $741,000. Chams records its Bad Debts Expense for that estimate. On the following February 1, Chams decides that the $371 account of P. Salah is uncollectible and writes it off as a bad debt. On June 5, Salah unexpectedly pays the amount previously written off.

Prepare the journal entries for these transactions.

3-At December 31, Fareed Coffee Company reports the following results for its calendar year.

Cash sales$908,000

Credit sales308,000

Its year-end unadjusted trial balance includes the following items.

Accounts receivable$133,000 debit

Allowance for doubtful accounts5,800debit

Prepare the adjusting entry to record bad debts expense assuming uncollectibles are estimated to be (a) 3% of credit sales, (b) 1% of total sales and (c) 6% of year-end accounts receivable.