Question
The ledger of Axel Company at the end of the current year shows Accounts Receivable $200,000, Sales Revenue 1,500,000, and Sales returns and allowances $45,000.
The ledger of Axel Company at the end of the current year shows Accounts Receivable $200,000, Sales Revenue 1,500,000, and Sales returns and allowances $45,000.
Instructions:
1. If Axel Company uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming the company has determined that customer X's balance of $900 is uncollectible.
2. If Allowance for Doubtful Accounts had a credit balance of $3,400 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 10% of accounts receivable.
3. If Allowance for Doubtful Accounts had a debit balance of $400 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 6% of accounts receivable.
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