Chapter 6, Problem 6.7E

Recording Bad Debt Expense Estimates and Write-Offs Using the Percentage of Credit Sales Method

During the current year, Adams Assembly, Inc., recorded credit sales of $1,300,000. Based on prior experience, it estimates a 1 percent bad debt rate on credit sales.

Required:

Prepare journal entries for each transaction:

1. a. On September 29 of the current year, an account receivable for $4.000 from March of the current year was determined to he uncollectible and was written off.
2. b. The appropriate bad debt expense adjustment was recorded for the current year.