Problem 9-8A Eastern Supply uses the allowance method in accounting for uncollectible accounts with the estimate based on the aging-of-accounts receivable method. The company had the fol- lowing account balances on August 31, 2017: Using the allowance method of accounting for uncollectibles, estimating uncollectibles by the percent-of-sales and the aging of-accounts-receivable methods accounting for notes receivable 26 2. Bad Debt Expense, debit, $48,960 Accounts Receivable Allowance for Doubtful Accounts (credit balance) $687,000 72,600 The following transactions took place during September 2017: Sep. 2 6 11 Elbow Inc., which owes $48,000, is unable to pay on time and has given a 25-day, 8 percent note in settlement of the account. Received from Irma Good the amount owed on an August 7 dishonoured note, plus extra interest for 30 days at 4 percent computed on the maturity value of the note ($12,600). This dishonoured note had been converted to an account receivable on August 7. Received notice that a customer (Tony Goad) has filed for bankruptcy. Goad owes $19,200. The courts will confirm the amount recoverable at a later date. Determined the account receivable from Kay Walsh ($9,120) was uncollect- ible and wrote it off. Received a cheque from the courts in the amount of $15,000 as final settle- ment of Goad's account. Elbow Inc. paid the note received on September 2. Determined the account receivable for Dave Campbell ($5,040) was uncol- lectible and wrote it off. Sales for the month totalled $720,000 (of which 85 percent were on account) and collections on account totalled $601,200. Eastern Supply did an aging of accounts receivable that indicated that $75,000 is expected to be uncollectible. The company recorded the appro- priate adjustment 30 1. Record the above transactions in the general journal. 2. What would be the adjusting entry required on September 30 if the company used the percent-of-sales method with an estimate of uncollectibles equal to 8 percent of credit sales? 3. Which of the two methods of estimating uncollectible accounts would normally be more accurate? Why