Question.

The Accounts Receivable balance for River Corporation is $360,000 as of January 31, 2020. Before calculating and recording January 2020 Bad Debt Expense, the Allowance for Doubtful Accounts has a credit balance of $6,000. Credit sales for January 2020 are $4,000,000, and over the past several years, 2% of credit sales have proven uncollectible. An aging of River Corporations Accounts Receivable results in a $78,000 estimate for the Allowance for Doubtful Accounts as of January 31, 2020.

Part A: PERCENT OF SALES METHOD

Assume that River Corporation uses the percent of sales method to estimate future uncollectible accounts.

a. What adjusting entry does River make to record January 2020 Bad Debt Expense?

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b. What is the Accounts Receivable, net on Rivers January 31, 2020 Balance Sheet?

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c. What is Bad Debt Expense on Rivers January 2020 Income Statement?

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Part B: ANALYSIS OF RECEIVABLES METHOD

Assume that River Corporation instead uses the analysis of receivables method to estimate future uncollectible accounts.

a. What adjusting entry does River make to record January 2020 Bad Debt Expense?

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		fill in the blank 10 b. What is the Accounts Receivable, net on Rivers January 31, 2020 Balance Sheet? fill in the blank 11 c. What is Bad Debt Expense on Rivers January 2020 Income Statement? fill in the blank 12