Question
During August, total sales of $620,000 were recorded, all on credit. Sales returns and allowances totalled $10,000. Collections during the month were $507,000, which included
During August, total sales of $620,000 were recorded, all on credit. Sales returns and allowances totalled $10,000. Collections during the month were $507,000, which included the recovery of $1,000 from a customer account written off in a previous month. No accounts were written off during August. Tippleton Company changed its method of estimating bad debts to the balance sheet approach because the new accountant said it more accurately reflected uncollectible accounts. The resulting aging analysis determined total estimated uncollectible accounts at August 31 to be $12,500.
Required:
Prepare the August 31 adjusting entry to record estimated bad debts for August.
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