Grande Co., which uses an Allowance for Doubtful Accounts, had the following transactions in 2012, 2013, and 2014. (Use the income statement approach.)
a. Journalize the transactions. (The company uses the income statement approach in estimating bad debts.)
b. Journalize how Grande Co. would record the Robert Thompson bad debt situation if the direct write-off method were used.
Dec. 31 Recorded Bad Debts Expense of $12,400.
Apr. 3 Wrote off Edward Innis account of $4,200 as uncollectible.
June 4 Wrote off Robert Thompson account of $2,600 as uncollectible.
Aug. 5 Recovered $520 from Robert Thompson.