The J.T. Traverse Company is well known for its Traverse pens. The company recently reported the following amounts in its unadjusted trial balance as of December 31.

Debits

Credits

Accounts Receivable

$

31,191,000

Allowance for Doubtful Accounts

$

953,000

Sales Revenue

158,812,000

Required:

1. & 2.

Prepare the adjusting journal entry required at December 31 for recording Bad Debt Expense. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

(i) Assume Traverse uses ³/₄ of 1 percent of sales to estimate its bad debt expense for the year.

TIP: The percentage of credit sales method directly calculates Bad Debt Expense.

(ii) Assume instead that Traverse uses the aging of accounts receivable method and estimates that $1,009,000 of Accounts Receivable will be uncollectible.

TIP: The aging of accounts receivable method focuses on calculating what the adjusted Allowance for Doubtful Accounts balance should be. You need to consider the existing balance when determining the adjustment.

3.

Assume instead that Traverse uses the aging of accounts receivable method and estimates that $1,009,000 of Accounts Receivable will be uncollectible and unadjusted balance in Traverses Allowance for Doubtful Accounts at December 31 was a debit balance of $10,150. Prepare the adjusting journal entry required at December 31 for recording bad debt expense. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

4.	If one of Traverses main customers declared bankruptcy, what journal entry would be used to write off its $10,000 balance? (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)