Question

The ledger of FMT Company at the end of the current year shows...

The ledger of FMT Company at the end of the current year shows Accounts Receivable 180,000, Sales Revenue 1,800,000, and Sales Returns and Allowances 60,000.

Instructions:

Journalize entries to record allowance for doubtful accounts using different bases.

1. If FMT uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming FMT determines that Rose's 2,900 balance is uncollectible.

2. If Allowance for Doubtful Accounts has a credit balance of 4,300 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1 % of net sales, and (2) 10% of accounts receivable.

3. If Allowance for Doubtful Accounts has a debit balance of 410 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable.