Blunt Company makes credit sales of $21,000 during the month of February 2016. During 2016, collections are received on February sales of $20,400, accounts representing $600 of these sales are written off as uncollectible, and a $100 account previously written off is collected. Required:1.Prepare the journal entries necessary to record the preceding information if (a) bad debts are estimated as 3% of credit sales at the time of sale and (b) the bad debts are recorded as they actually occur.2.Next Level Which method—recording bad debts at the time of sale or when they actually occur—is preferred? Why?

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Blunt Company makes credit sales of $21,000 during the month of February 2016. During 2016, collections are received on February sales of $20,400, accounts representing $600 of these sales are written off as uncollectible, and a $100 account previously written off is collected.

	Required:
1.	Prepare the journal entries necessary to record the preceding information if (a) bad debts are estimated as 3% of credit sales at the time of sale and (b) the bad debts are recorded as they actually occur.
2.	Next Level Which method—recording bad debts at the time of sale or when they actually occur—is preferred? Why?

Required:

Prepare the journal entries necessary to record the preceding information if (a) bad debts are estimated as 3% of credit sales at the time of sale and (b) the bad debts are recorded as they actually occur.

Next Level Which method—recording bad debts at the time of sale or when they actually occur—is preferred? Why?

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