The trial balance before adjustment Company reports the following balances:

Dr. Cr.

Accounts receivable $800,000

Allowance for doubtful accounts $ 6,000

Sales (all on credit) 1,440,000

Sales returns and allowances 75,000

(a) Prepare the journal entry for estimated bad debts assuming that doubtful accounts are estimated to be

8% of gross accounts receivable. Show calculation as journal entry description.

(b) Prepare the journal entry for estimated bad debts assuming that doubtful accounts are estimated to be

8% of gross accounts receivable, but now the allowance for doubtful accounts is a $7,000 debit

balance. Show calculation as journal entry description.

(c) Prepare the journal entry for estimated bad debts using the net credit sales method if 7% of net credit

sales are assumed to become bad debt assuming the data above. Show calculation as journal entry

description.

(d) Assume that all the information above is the same for (c), except that the Allowance for Doubtful

Accounts has a debit balance of $5,000 instead of a credit balance. Show calculation as journal entry

description.