Percent of sales method; write-off At year-end (December 31), Rashed Company estimates its bad debts as 0.75% of its annual credit sales of AED790,000. Rashed records its bad debts expense for that estimate.   On the following February 15, Rashed decides that the AED1,250 account of A. Abdulla is uncollectible and writes it off as a bad debt.   On March 31st, Abdulla unexpectedly pays the amount previously written off.   Required: Prepare the journal entries of Rashed to record these transactions and events of December 31, February 15, and March 31st.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Percent of sales method; write-off

  • At year-end (December 31), Rashed Company estimates its bad debts as 0.75% of its annual credit sales of AED790,000. Rashed records its bad debts expense for that estimate.

 

  • On the following February 15, Rashed decides that the AED1,250 account of A. Abdulla is uncollectible and writes it off as a bad debt.

 

  • On March 31st, Abdulla unexpectedly pays the amount previously written off.

 

Required:

Prepare the journal entries of Rashed to record these transactions and events of December 31, February 15, and March 31st.

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