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The trial balance before adjustment of Risen Company reports the following balances: Cr. $...

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Question

Accounting

The trial balance before adjustment of Risen Company reports the following balances:
Cr.
$ 750,000
Dr.
Sales (all on credit)
Sales returns and allowances
Accounts receivable
Allowance for doubtful accounts
$40,000
100,000
2,500
Instructions
(a) Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated
to be 8% of gross accounts receivable. Please show your calculations.
(b) Assume that all the information above is the same, except that the Allowance for Doubtful
Accounts before adjustment has a credit balance of $9,000. How will this difference affect
the journal entries in part (a)?

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