Cornerstone Exercise 5-25 (Algorithmic) Percentage of Credit Sales

Clarissa Company has credit sales of $562,000 during 2019 and estimates at the end of 2019 that 2.5% of these credit sales will eventually default. Also, during 2019 a customer defaults on a $771 balance related to goods purchased in 2018. Prior to the write-off for the $771 default, Clarissa's accounts receivable and allowance for doubtful accounts balances were $402,000 and $129 (credit), respectively.

Required:

1. Prepare the journal entry to record the defaulted account.

	Record write-off of defaulted account

2. Prepare the adjusting entry to record the bad debt expense for 2019.

	Record adjusting entry for bad debt expense estimate