It is February 1, 2014. Alex Kerr, owner of Kerr Consulting, has reviewed the receivables list from the January transactions (from Chapter 6, page 374). He has identified that Gene was not going to pay his $900 receivable from January 19. Kerr Consulting uses the allowance method for receivables, estimating uncollectibles to be 4 percent of credit sales.
Required
1. Journalize the entry to record and establish the allowance for doubtful accounts using the percent-of-sales method for January 2014 credit sales, which totaled $4,000.
2. Journalize the entry to record the identification of Gene's bad debt.