accounting questions! please help!

Project Description:

problem 7-1 allowance method for accounting for bad debts
at the beginning of 2012, ez tech company’s accounts receivable balance was $140,000, and
the balance in allowance for doubtful accounts was $2,350 (cr.). ez tech’s sales in 2012 were
$1,050,000, 80% of which were on credit. collections on account during the year were
$670,000. the company wrote off $4,000 of uncollectible accounts during the year.
required
1. prepare summary journal entries related to the sale, collections, and write-offs of accounts
receivable during 2012.
2. prepare journal entries to recognize bad debts assuming that (a) bad debts expense is 3%
of credit sales and (b) amounts expected to be uncollectible are 6% of the year-end accounts
receivable.
3. what is the net realizable value of accounts receivable on december 31, 2012, under each
assumption in part (2)?
4. what effect does the recognition of bad debts expense have on the net realizable value? what
effect does the write-off of accounts have on the net realizable value?
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