When dealing with Bad Debts there are 2 possible options. These are The percentage of sales method calculates v whilst Aged Receivables method calculates The following information is for the year ended 30 june 2018, prior to any adjustments: Sales for the year 120,000 Net credit sales for the year 100,000 Receipts on Account for the year 90,000 40,000 Accounts receivable, 30 June 2017 Allowance for bad debts, 30 June 2018 500 Cr What is the balance of Accounts Receivable as at 30 June, 2018: Assume the business uses the % of sales method for estimating bad debts. It estimates the relevant 96 to be 2%. The adjusting entry to record bad debts expense for the year is: The balance in the allowance for bad debts account after the above entry is: At the end of the financial year the business uses the ageing of accounts receivable method to confirm the balance of the allowance for bad debts account. Complete the following table to determine the Allowance using the Ageing of accounts receivable method at 30 June 2018: AR Collectable Allowance Ageing 1-30 days 30,000 98% 30-60 days 95% 15,000 4,000 61-90 days 90% Over 90 days 1,000 75% According to this the balance of the allowance for bad debts should be: The journal to make this adjustment is: What is Net Accounts Receivable? The business now identifies an account for $150 that is uncollectable. The journal to write this account off is: The balance of Net Accounts Receivable after writing off the bad debt will be