The ledger of Costello Company at the end of the current year shows Accounts Receivable

The ledger of Costello Company at the end of the current year shows Accounts Receivable $121,000, Sales Revenue $854,000, and Sales Returns and Allowances $31,000.

If Costello uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Costello determines that L. Dole’s $2,100 balance is uncollectible.

If Allowance for Doubtful Accounts has a credit balance of $2,800 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1% of net sales, and (2) 12% of accounts receivable.

If Costello uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Costello determines that L. Dole’s $2,100 balance is uncollectible.

Bad Debt Expense Debit 2100
Accounts Receivable Credit 2100

If Allowance for Doubtful Accounts has a credit balance of $2,800 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1% of net sales, and (2) 12% of accounts receivable.

(1) Bad Debt Expense Debit [($854,000 – $31,000) × 1%] = $8,230
Allowance for Doubtful Accounts Credit 8230

(2)Bad Debt Expense Debit [($121,000 × 12%) – $2,800] = $11,720
Allowance for Doubtful Accounts Credit 11720