The trial balance before adjustment of Risen Company reports the following balances: DR CR...
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Accounting
The trial balance before adjustment of Risen Company reports the following balances:
DR CR
Accounts receivable $100,000
Allowance for doubtful accounts $ 2,500
Sales (all on credit) $750,000
Sales returns and allowances $40,000
Required:
(a) Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be (1) 6% of gross accounts receivable and (2) 1% of net sales
(b) Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $2,500 instead of a credit balance. How will this difference affect the journal entries in part (a)?
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