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The Bolton Sign Company uses the allowance method in accounting for uncollectible accounts. Past experience indicates that 5% of accounts receivable will eventually be uncollectible.

The Bolton Sign Company uses the allowance method in accounting for uncollectible accounts. Past experience indicates that 5% of accounts receivable will eventually be uncollectible. Selected account balances at December 31, 2002, and December 31, 2003, appear below:

                                         12/31/02       12/31/03

 Net Credit Sales -               $400,000 $500,000 

Accounts Receivable -            80,000 100,000

 Allowance for Doubtful -          3,600   ?

Accounts 


INSTRUCTIONS 

1. Record the following events in 2003.

8/10 Determined that the account of Jane Duncan for $600 is uncollectible

9/12 Determined that the account of Jeff Lynch for $2000 is uncollectible.

10/10 Received a check for $500 as payment on account from Jane Duncan, whose account had previously been written off as uncollectible.

2 . Prepare the adjusting journal entry to record the bad debt provision for the year ended December 31, 2003.

3. What is the balance of Allowance for Doubtful Accounts at December 31, 2003?

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