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

Instructions

Pass the journal entries for estimated bad debts assuming that doubtful debts accounts are estimated to be

(1) 6% of gross accounts receivable and

(2) 1% of net sales.

Dr. r. $100,000 Accounts receivable Allowance for doubtful accounts Sales (all on credit) Sales returns and allowances S 2,500 750,000 40,000