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Red Hat, Incorporated, is a software development company that recently reported the following amounts (in thousands) In its unadjusted trial balance as of February 28, 2019. Debits Credits Accounts Receivable $984,750 Allowance for Doubtful Accounts $ 4,500 Sales and Service Revenue 3,300,000 Required: 1. Assume Red Hat uses We of 1 percent of revenue to estimate its bad debt expense for the year. Prepare the adjusting journal entry required at February 28 for recording Bad Debt Expense. 2. Assume instead that Red Hat uses the aging of accounts receivable method and estimates that $5,000 (thousand) of Accounts Receivable will be uncollectible. Prepare the adjusting journal entry required at February 28 for recording bad debt expense. TIP: The aging of accounts receivable method focuses on calculating what the adjusted Allowance for Doubtful Accounts balance should be. You need to consider the existing balance when determining the adjustment 3. Assume that the unadjusted balance in Red Hat's Allowapce for Doubtful Accounts at February 28 was a debit balance of $1,000 (thousand). Red Hat uses the aging of accounts receivable method and estimates that $5,000 (thousand) of Accounts Receivable will be uncollectible. Prepare the adjusting Journal entry required at February 28 for recording bad debt expense. 4. If one of Red Hat's customers declared bankruptcy, what journal entry would be used to write off its $500 (thousand) balance? Journal entry worksheet Record the adjusting entry for bad debts as of February 28, using the aging of accounts recelvable method. Note: Enter debits before credits. General Journal Debit Credit Date February 28, 2019 View general journal Record entry Clear entry Journal entry worksheet Record the write-off of a $500,000 customer account, which is not collectible due to bankruptcy. Note: Enter debits before credits. Debit Credit Transaction General Journal View general Journal Clear entry Record entry

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