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At the end of the year, the M$.$ I. Wright Company showed the following selected account balances:

Sales $($all on credit$).........................................................................$ $$300,000$

Accounts Receivable....................................................................... $800,000$

Allowance for Doubtful Accounts................................................... $38,000$

Required:

$1.$ Assume the company estimates that $1\%$ of all credit sales will not be collected.

a$.$ Prepare the proper journal entry to recognize the expense involved.

b$.$ Present the balances in Accounts Receivable and Allowance for Doubtful Accounts as they would appear on the balance sheet. Also show the net realizable Accounts Receivable.

$2.$ Assume the company estimates that $5\%$ of its accounts receivable will never be collected.

a$.$ Prepare the proper journal entry to recognize the expense involved.

b$.$ Present the balances in Accounts Receivable and Allowance for Doubtful Accounts as they would appear on the balance sheet. Also show the net realizable Accounts Receivable.

$3.$ Under assumptions $1$ and $2$ above, give the proper journal entries for the following events.

June $3$ John Shifty, who owes us $$500,$ informs us that he is broke and cannot pay. We believe him.

Nov. $9$ We learned that John Shifty has won the lottery and is willing to pay off all his old debts.

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