Pebble Company began operations on November 1, Y1. Sales data for the first years of operations were as follows:

Year	Total Credit Sales	Sales Returns & Allowances	Sales Discounts
Y1	$100,000	$1,000	$200
Y2	$1,000,000	$8,000	$600
Y3	$1,020,000	$9,000	$800

All sales to customers are made on account. Collections on the accounts receivable were:

Year	Cash Collections
Y1	$76,800
Y2	761,500
Y3	1,160,000

Some customers of Marcus Baides Company have not paid their bills on time, and the company decided to write off those accounts receivable balances. A schedule of write-offs follow:

Customer Name	Date of the write off	Amount of the write-off
Devin Brunet	3-15-Y2	$500
Will Carter	6-15-Y2	$2,100
Paige Daneau	10-02-Y2	$3,400
T. Douillette	12-30-Y2	$5,100
Rene Dubois	1-05-Y3	$4,000
Teri OBrien	1-20-Y3	$4,500
Sofia Pantazis	5-15-Y3	$2,000
R. Ribeiro	11-20-Y3	$3,500

In some cases, after the receivable was written off, the customer subsequently paid some or all of the balance that was due. These subsequent payments are not included in the cash receipts noted above. The following schedule shows these payments of delinquent accounts:

Customer Name	Original A/R Dollar Amount	Date A/R Written Off	Date Reinstated	Amount Customer Pledged to Pay	Date Cash Collected	Amount of Cash Collected
Devin Brunet	$500	3-15-Y2	9-15-Y2	$500	9-15-Y2	$500
Rene Dubois	$4,000	1-05-Y3	4-15-Y3	$4,000	8-15-Y3	$1,700
Sofia Pantazis	$2,000	5-15-Y3	9-18-Y3	$2,000	9-18-Y3	$1,000

PART A: Assume Pebble Company uses the income statement approach of recording bad debt. Bad debt allowance percentages are:

Year	Bad Debt Percentage
Y1	2.0%
Y2	2.5%
Y3	2.4%

REQUIRED:

Prepare all journal entries necessary to record the accruals, write-offs, write-off reversals and cash collected on write-off reversals for years Y1, Y2, and Y3.

Using the T account tool, demonstrate the activity in the Allowance for Doubtful Accounts account for the one year period ending December 31, Y3.

Show the calculation of the Net Realizable Value of the receivables at December 31, Y3.

PART B: Assume Pebble Company uses the balance sheet approach to record the Allowance for Doubtful Accounts account. Data for Part B is as follows:

Year	Allowance %
Y1	8.0%
Y2	8.4%
Y3	8.6%

REQUIRED:

1.Prepare all journal entries necessary to record the accruals, write-offs, write-off reversals and cash collected on write-off reversals for years Y1, Y2, and Y3.

2.Using the T account tool, demonstrate the activity in the Allowance for Doubtful Accounts account for the one year period ending December 31, Y3.

3.Show the calculation of the Net Realizable Value of the receivables at December 31, Y3.