Jos Sign Company uses the allowance method in accounting for uncollectible accounts. Past experience indicates that 1.5% of net credit sales will eventually be uncollectible. Selected account balances at December 31, 2001, and December 31, 2002, appear below: (12 marks total)

12/31/01 12/31/02

Net Credit Sales $400,000 $500,000

Accounts Receivable 75,000 100,000

Allowance for Doubtful Accounts 5,000 4,550

Instructions

(a) Record the following events in 2002. (2 marks each x 4 = 8 marks)

Aug. 10 Determined that the account of Soo Tang for $1,000 is uncollectible.

Sept. 12 Determined that the account of Jeff Lynch for $4,000 is uncollectible.

Oct. 10 Received a cheque for $550 as payment on account from Soo Tang, whose account had previously been written off as uncollectible. She indicated the remainder of her account would be paid in November.

Nov. 15 Received a cheque for $450 from Soo Tang as payment on her account.

(b) Prepare the adjusting journal entry to record the bad debt provision for the year ended December 31, 2002. (2 marks)

(c) What is the balance of Allowance for Doubtful Accounts at December 31, 2002? (2 marks)