Gupta Electronic recorded $425,000 of credit sales during its first year of operation Gupta reported $102,000 (Dr ) in Accounts Receivable and $2,800 (Dr ) in Allowance for Doubtful Accounts before the adjustments at the end of the year The Accounts Receivable account has $65,000 that is current an...

Req 1 3 of credit sales 425000 3 12750 Aging of accounts receivable 65000 1 650 3700 ...

Gupta Electronic recorded $425,000 of credit sales during its first year of operation. Gupta reported $102,000 (Dr.)

Question:

Gupta Electronic recorded $425,000 of credit sales during its first year of operation. Gupta reported $102,000 (Dr.) in and $2,800 (Dr.) in Allowance for Doubtful Accounts before the adjustments at the end of the year. The account has $65,000 that is current and $37,000 that is 30 days or older. The accountant is wondering which method to use to estimate the bad debts. She has two options:
(1) 3% of credit sales
(2) Aging of 1 % of current 20% of 30+.
Requirements
1. Calculate the bad debt expense using
(1) The percentage of credit sales,
(2) The aging of Prepare the adjusting journal entry to record bad debt expense using the two different methods.
3. Explain the main differences between the two methods of estimating bad debts.
Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...