Sales Revenue, Receivables, and Cash CHAPTER 6 Reporting and Interpreting re of Allowance for Doubtful Recording Bad Debts and Interpreting Disclosu Accounts (AP6-4) P6-4 Jayco Inc. started its operations in 2016. Its sales, all on account, totalled $700,000. collected $500,000 in cash from customers accounts. The company set up an allowance for doubtful a year end, and determined theaccount balance to be $14,000. T accounts at December 31, 2017, are as follows: Accounts receivable Allowance for doubtful accounts (debit) Sales revenue (including 80 percent in sales on account) The compan during the year and wrote off $8,000 in ccounts at December 31, 2 2016, its fis he unadjusted balances of selec $300,000 10,000 800,000 Aging of the accounts receivable on December 31, 2017, resulted in an estimate of $I potentially uncollectible accounts. Required: 1. Prepare the journal entries to record all the transactions during 2016 and post them to appropriate T-accounts. 2. Prepare the journal entries to record all the transactions during 2017 and post them to appropriate T-accounts. 3. Compute the receivables turnover ratio and the average collection period for 2017, and comment on the results. 4. Does the write-off of accounts receivable affect the current ratio? Explain. 5. Does the recording of bad debt expense affect the receivables turnover ratio? Explain. P6-5 Determining Bad Debt Expense Based on Aging Analysis (AP6-5)