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

Dr. Cr.

Accounts receivable $500,000

Allowance for doubtful accounts $45,000

Sales (all on credit) 2,000,000

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 $45,000 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 2% of net sales.