Pips Pumpkin Company sells pumpkins to customers and has the following balances on Jan 1^st 2020:

Accounts Receivable: $185,000 DR

Allowance for Doubtful Accounts: $3,200 CR

During 202 Pip incurred the following transactions:

Sales made during the year on account $775,000

Cash Payments received during the year from the account receivable customers. $625,000

A customer, who owed Pip $1,700 declared bankruptcy and Pip needed the close his account.

1. Record the transactions pertaining to sales and accounts receivable in the journal and update the appropriate balances.

2. Pip is trying to decide which valuation method he should use to calculate Bad Debt Expense and the balance in the allowance for Doubtful Accounts.

1. Assume Pip estimates that 4% of the account receivable balance will not be paid:
   1. Record the adjusting entry at Dec 31^st in the Journal.
   2. What is the Realizable Value?

2. Assume Pip estimates that 7% of the Sales on Account will not be paid:
   1. Record the adjusting entry at Dec 31^st in the journal
   2. What is the Realizable Value?