During the year ended December Kellys Camera Shop had sales revenue of $ of which $ was on credit. At the start of Accounts Receivable showed a $ debit balance and the Allowance for Doubtful Accounts showed a $ credit balance. Collections of accounts receivable during amounted to $
Data during follow:
On December a customer balance of $ from a prior year was determined to be uncollectible, so it was written off.
On December a decision was made to continue the accounting policy of basing estimated bad debt losses on percent of credit sales for the year.
Required:
Give the required journal entries for the two events in December.
a Show how the amounts related to Bad Debt Expense would be reported on the income statement.
b Show how the amounts related to Accounts Receivable would be reported on the balance sheet.
On the basis of the data available, does the percent rate appear to be reasonable?
