The trial balance before adjustment of Rosen Company reports the following balances:

Dr. Cr.

Accounts receivable $500,000

Allowance for doubtful accounts $10,000

Sales (all on credit) 2,400,000

Required:

(a) Prepare the journal entry for estimated bad debts assuming that doubtful accounts are estimated to be 6% of gross accounts receivable.

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

Accounts has a debit balance of $10,000 instead of a credit balance. How will this

difference affect the journal entry in part (a)?

(c) Prepare the journal entry for estimated bad debts assuming that doubtful accounts are

estimated to be 1.5% of net sales.