dentify impact of accounts receivable nd bad debt transactions; determine atement presentation.

P$8\mathrm{.}2$B $($LO $1,2,4)$ AP Rayon Co$.$ 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. Rayon Co$.$ has a May $31$ fiscal year end, closes temporary accounts annually, and uses the perpetual inventory system.

On March $31,2024,$ after completing its month$-$end adjustments, it had accounts receivable of $$89,200,$ a credit balance of $$4,930$ in Allowance for Doubtful Accounts, and a debit balance in Bad Debt Expense of $$19,880.$ In April and May, the following transactions occurred:

April

Sold $$64,600$ of merchandise on credit. The cost of the merchandise was $$35,530.$

Accepted $$800$ of returns on the merchandise sold on credit. These customers were issued credit memos. The merchandise had a cost of $$440$ and was discarded because it was damaged.

Collected $$69,200$ cash on account from customers.

Interest charges of $$1,645$ were charged to outstanding accounts receivable.

As part of the month$-$end adjusting entries, recorded bad debt expense of $3\%$ of net credit sales for the month.

May

Credit sales were $$76,600.$ The cost of the merchandise was $$42,130.$

Received $$450$ cash from a customer whose account had been written off in March.

Collected $$78,500$ cash, in addition to the cash collected in transaction $2.$ above, from customers on account.

Wrote off $$9,580$ of accounts receivable as uncollectible.

Interest charges of $$1,570$ were charged to outstanding accounts receivable.

Recorded the year$-$end adjustment for bad debts. Uncollectible accounts were estimated to be $6\%$ of accounts receivable.

Instructions

a$.$ For each of these transactions, indicate if the transaction has increased $(+)$ or decreased $(-)$ Cash, Accounts Receivable, Allowance for Doubtful Accounts, Inventory, Total Assets, and Owner's Equity, and by how much. If the item is not changed, write NE to indicate there is no effect. Use the following format, in which the first one has been done for you as an example. Round calculated amounts to the nearest dollar.

$\backslash$table$[[$Transaction$,$Cash,$\backslash$table$[[$Accounts$],[$Receivable$]],\backslash$table$[[$Allowance for$],[$Doubtful Accounts$]],\backslash$table$[[$Merchandise$],[$Inventory$]],\backslash$table$[[$Total$],[$Assets$]],\backslash$table$[[$Owner$\text{'}$s$],[$Equity$]]],[,$I,$+$$$64,600,NE,-$$$35,530,+$$$29,070,+$$$29,070$