Patagonia Corp.s unadjusted trial balance included the following:

Debit Credit

Accounts receivable.................................................................. $140,000

Allowance for doubtful accounts........................................... $890

Sales............................................................................................. 425,000

Sales returns and allowances................................................. 10,000

Instructions

a) Prepare adjusting journal entries assuming that the estimate of uncollectibles is determined by using 4% of gross accounts receivable.

b) Prepare adjusting journal entries assuming that the estimate of uncollectibles is determined by using 1.5% of net sales.