The trial balance before adjustment of Ehrlich Company reports the following balances: Dr. Cr. Accounts receivable $420,000 Allowance for doubtful accounts (debit balance) $ 5,000 Sales (all on credit) 2,000,000 Sales returns and allowances 70,000 Instructions – show all calculations a. Prepare the entry for estimated bad debts assuming that doubtful accounts are estimated to be 5% of gross accounts receivable. b. Prepare the entry for the estimated bad debts assuming that the company estimates bad debts based on the percentage of sales method, using 2% of net sales.
The
Dr. Cr.
Allowance for doubtful accounts (debit balance) $ 5,000
Sales (all on credit) 2,000,000
Sales returns and allowances 70,000
Instructions – show all calculations
a. Prepare the entry for estimated
b. Prepare the entry for the estimated bad debts assuming that the company estimates bad debts based on the percentage of sales method, using 2% of net sales.
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