Textbook Problem

UNCOLLECTIBLE ACCOUNTS—PERCENTAGE OF SALES AND PERCENTAGE OF RECEIVABLES At the end of the current year, the accounts receivable account of Parker’s Nursery Supplies has a debit balance of $350,000. Credit sales are $2,300,000. Record the end-of-period adjusting entry on December 31, in general journal form, for the estimated uncollectible accounts. Assume the following independent conditions existed prior to the adjustment:

1. 1. Allowance for Doubtful Accounts has a credit balance of $1,920.
   1. (a) The percentage of sales method is used and bad debt expense is estimated to be 1% of credit sales.
   2. (b) The percentage of receivables method is used and an analysis of the accounts produces an estimate of $24,560 in uncollectible accounts.
2. 2. Allowance for Doubtful Accounts has a debit balance of $1,280.
   1. (a) The percentage of sales method is used and bad debt expense is estimated to be ¾ of 1% of credit sales.
   2. (b) The percentage of receivables method is used and an analysis of the accounts produces an estimate of $22,440 in uncollectible accounts.