On December 31, 2020 , Company Dragon Fly has the following information as presented below

Account

$

A/C Receivable at the beginning of the year

78,720

Debt written off that was recovered during the year

4500

ADA [credit balance in the beginning]

2450

Sales

454600

Sales Return

4800

Sales Discount

4% of sales

25% of the sales are cash

The company has decided to estimate bad debt for the year based on 4% sales .The writing off of the debt occurs before the estimation of Allowance for Doubtful debt [ADA]

Required

Part 1 [ sales Approach]

A. Calculate bad debt

B. Journalize the bad debt and the Allowance for doubtful debt

C. Post them on T account

D. Show the balance extract for the account receivable

Part 2 [ Account Receivable method ]

If the company decides to use the account receivable method { Use 8% A/C receivable ]

A. Calculate the desired balance of ADA

B. Calculate the bad debt and show them on T Account

C. Journalize bad debt and the ADA

D. Show the balance sheet extract for the Net Realizable Value