Wasson Corp had the following items in its unadjusted trial balance at December 31: Debit Credit Sales, cash $88,000 Sales, credit 120,000 Accounts receivable $96,000 Allowance for doubtful accounts 1,000

Required

Prepare the adjusting entry to estimate bad debts under each of the following independent situations.

a. Bad debts are estimated to be 8% of credit sales.

b. An analysis shows that 8% of outstanding accounts receivable will not be collected.

c. Prepare a current asset section of the balance sheet under the (a) and then (b) assumptions.

Wasson Corp had the following items in its unadjusted trial balance at December 31: Debit Credit Sales, cash $88,000 Sales, credit 120,000 Accounts receivable $96,000 1,000 Allowance for doubtful accounts Required Prepare the adjusting entry to estimate bad debts under each of the following independent situations. a. Bad debts are estimated to be 8% of credit sales. b. An analysis shows that 8% of outstanding accounts receivable will not be collected c. Prepare a current asset section of the balance sheet under the (a) and then (b) assumptions