Question

The ledger of Costello Company at the end of the current year shows Accounts Receivable $132,000, Sales Revenue $859,000, and Sales Returns and Allowances $31,000. (a) If Costello uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Costello determines that L. Dole's $2,400 balance is uncollectible. (credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Date Account Titles and Explanation Credit Dec. 31 Bad Debt Expense T 2400 T Accounts Receivable 2400 (b) If Allowance for Doubtful Accounts has a credit balance of $3,000 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 3% of net sales, and (2) 12% of accounts receivable. (credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Date Account Titles and Explanation Debit Credit (1) Dec. 3 Bad Debt Expense Allowance for Doubtful Acc (2) Dec. 3r Bad Debt Expense Allowance for Doubtful Acc