Cotton Company uses the percentage of sales approach to record bad debt expense for its monthly financial statements and the percentage of receivables approach for its year-end financial statements. Cotton Company has an October 31 fiscal year end, closes temporary accounts annually, and uses a perpetual inventory system Cotton Company has no stated return policy On August 31, 2021, after completing its month-end adjustments it had accounts receivable of 574,500, a credit balance of 52,980 in Allowance for Doubtful Accounts and bad debt expense of $9860. in September and October, the following occurred: September 1. 2 3 4. Sold $56,300 of merchandise on account the cost of the merchandise was $25.335. A total of $900 of the merchandise sold on account was returned. The customers were issued credit memos. The cost of the merchandise was $400 and it was returned to inventory Collected $59200 cash on sccount from customers Interest charges of $745 were changed to outstanding accounts receivable As part of the month and adjusting entries, recorded bad debt expense of 2% of credit sales for the month October 1 2 3 Credit ales in the month were $63,900. the cost of the merchandise was $28.7003 Received $350 cash from customer whose account had been written att in July Collected $58.500 cash in addition to the cash collected in transaction 2. above from customers on account Wrote of $7.500 ot accounts receivable as uncollectible 6710 Activate Window Www Cotton Company uses the percentage of sales approach to record bad debt expense for its monthly financial statements and the percentage of receivables approach for its year-end financial statements. Cotton Company has an October 31 fiscal year end, closes temporary accounts annually, and uses a perpetual inventory system Cotton Company has no stated return policy On August 31, 2021, after completing its month-end adjustments it had accounts receivable of 574,500, a credit balance of 52,980 in Allowance for Doubtful Accounts and bad debt expense of $9860. in September and October, the following occurred: September 1. 2 3 4. Sold $56,300 of merchandise on account the cost of the merchandise was $25.335. A total of $900 of the merchandise sold on account was returned. The customers were issued credit memos. The cost of the merchandise was $400 and it was returned to inventory Collected $59200 cash on sccount from customers Interest charges of $745 were changed to outstanding accounts receivable As part of the month and adjusting entries, recorded bad debt expense of 2% of credit sales for the month October 1 2 3 Credit ales in the month were $63,900. the cost of the merchandise was $28.7003 Received $350 cash from customer whose account had been written att in July Collected $58.500 cash in addition to the cash collected in transaction 2. above from customers on account Wrote of $7.500 ot accounts receivable as uncollectible 6710 Activate Window Www