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
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.
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