Requirement $1$: The company wants to use the allowance method to estimate bad debts. Assume a zero beginning balance for Allowance for Bad Debts.

$1$a: Determine the estimated bad debts expense under the percent$-$of$-$sales method at December $31,2023.$ Assume that $5\mathrm{.}5\%$ of credit sales will not be collected.

$($Do not type any of the amounts into the T$-$accounts, use formulas$/$cell references to the first tab.

Method Estimated Bad Debts

Percent$-$of$-$sales $<--$ use a formula

$1$b: Determine the ending balance in the allowance account under the percent$-$of$-$receivables method at December $31,20123.$ Assume that $14\%$ of receivables will not be collected.

Method Estimated Bad Debts

Percent$-$of$-$receivables $<--$ use a formula

$1$c: Determine the ending balance of the allowance account under the aging$-$of$-$receivables method at December $31,2023.$ Assume that $1\%$ of invoices $1-30$ days will not be collected, $20\%$ of invoices $31-60$ days, $35\%$ of invoices $61-90$ days, and $50\%$ of invoices over $90$ days.

Customer Name $1-30$ Days $31-60$ Days $61-90$ Days Over $90$ Days Total Balance

Cochin Co$.$ $$300$ $$300$

RIR Co$.600$ $$1,2001,800$

Golden Co$.$ $$600600$

Lavender Orpington Co$.1,3501,350$

Ancona Co$.$ $$1,0501,050$

Copper Maran Co$.450450$

Cinnamon Queen Co$.1,9501,9503,900$

Isbar Co$.7507507502,250$

Total $$5,400$ $$3,900$ $$1,800$ $$600$ $$11,700$

$<--$ Insert the percentages listed above for each category. Format the cell as a percentage.

$<--$ Create formulas to calculate the total estimated uncollectible amounts for each category and in total. Also, format these cells with a single underline at the top and a double underline at the bottom.

Requirement $2$: Journalize the entry at December $31,2023$ to adjust for bad debts expense using the percent$-$of$-$sales method.

Date Account and Explanation Debit Credit

Requirement $3$: Journalize the entry at December $31,2023$ to record the write$-$off of the Golden Co$.\text{'}$s invoice. $($See the aging schedule.$)$

Date Account and Explanation Debit Credit

Requirement $4$: At December $31,2023,$ T$-$Accounts for Accounts Receivable and Allowance for Bad Debts before Requirements $2$ and $3$ have been opened for you. Post entries from Requirements $2$ and $3$ to those accounts. Assume a zero beginning balance for Allowance for Bad Debts. Use formulas to insert the amounts into the t$-$accounts and to calculate the ending balance.

Accounts Receivable Allowance for Bad Debts

Insert beginning balance $-->$

Requirement $5$: Show how the company will report net accounts receivable on the balance sheet at December $31,2023.$ Use formulas whenever possible.

Current Assets:

Requirement $6$: Assume that the company uses the percent$-$of$-$receivables method $($see Requirement $2$ above$).$ Calculate bad debt expense for the December $31,2023$ adjusting entry. Assume that the Allowance for Bad Debts account has a debit balance of $$400.$ Step $1$ of the process was completed with Requirement $1$b above. This is the target balance. Use the t$-$account to calculate the adjustment needed. Then, write the journal entry for Bad Debt Expense as of December $31,2023.$

Allowance for Bad Debts

Date Account and Explanation Debit Credit

Requirement $7$: Assume that the company uses the aging$-$of$-$receivables method $($see Requirement $3$ above$).$ Calculate bad debt expense for the December $31,2023$ adjusting entry. Assume that the Allowance for Bad Debts account has a credit balance of $$450.$ Step $1$ of the process was completed with Requirement $1$c above. This is the target balance. Use the t$-$account to calculate the adjustment needed. Then, write the journal entry for Bad Debt Expense as of December $31,2023.$

Allowance for Bad Debts

Date Account and Explanation Debit Credit