Question 4

Company X had the following information before adjustments:

• Accounts receivable $230,000 (debit balance)
• Allowance for doubtful accounts $3400 (credit balance)
• Sales revenue (on credit) $1,580,000 (credit balance)
• Sales returns and allowances $85,000 (debit balance)

Prepare the journal entry to record bad debt expense if the company estimates it to be 3% of

receivables. Now assume the company determines that $3,000 will never be received. Prepare the

journal entry to record the write-off. What is the net amount expected to be collected of the

receivables after the write-off?