EXERCISE ONE: ESTIMATE BASED ON SALES 1) June 30: A business records $750,000 in credit sales for the month of June. In the past, approximately 2% of all credit sales ultimately become uncollectible. Record the sales entry and the entry to establish the Allowance for Doubtful Accounts balance. 2) July 15: The company determines that an account balance from Susan Kendall in the amount of $3,000 is uncollectible. Record the entry to write-off the balance. 3) July 31: The same business recorded $600,000 in credit sales for the next month (July). Using the same 2% uncollectible rate, record the sales entry and the entry to add to the Allowance for Doubtful Accounts balance. Pg. 2 Accounts Receivable Sales Revenue TET I Allowance for Doubtful Accounts Uncollectible Accounts Expense Bal. $ Bal.$ EXERCISE TWO: Complete the following problem using the provided t-accounts. If you get stuck, review the completed example above once again. Roduk Inc. uses the Allowance method for accounting for uncollectible receivables. (a) Record the adjusting entry at December 31, the end of the fiscal year, to estimate for doubtful accounts. The accounts receivable account has a balance of $200,000, and the Allowance for Doubtful Accounts before adjustment has a credit balance of $4,200. Analysis of an aging of receivables estimates doubtful accounts of $8,000 at 12/31. (b) In April of the following fiscal year, $700 owed by Kathy Jones on account is written off as uncollectible. (C) A few weeks later, Kathy pays the $700 balance. Accounts Receivable Allowance for Doubtful Accounts Uncollectible Accounts Expense Cash TT Bal. $ Se Bal. $ Pg. 4