Tara Kelly Company has the following balances on Jan 1, 2017:

Accounts Receivable $500000

Allowance for Bad Debts $(5200)

During the year Tara had a total of $950000 in Sales on Accounts Receivable. She collected $765000 in Cash Collections for her Account Receivable customers during 2017 as well. Tara was notified that a customer who owed her $6000 had declared bankruptcy during the year.

Tara is trying to decide which Account Receivable Allowance and Bad Debt Method works best for her:

a. She determines that %5.5 of her CREDIT sales may be uncollectible (% of Net Sales method)

b. She determines that %8 of her Account Receivable Customers will not pay her (% of Accounts Receivable Method).

REQUIRED

1. record all transactions listed above for 2017 in the journal

2. update ledgers

3. prepare journal entry if tara uses % of Net sales method

4. what would be Tara's REALIZABLE value?

5. Prepare the journal entry if tara uses $ of Account Receivable method

6. What would be Tara's Realizable value?