Megan 's Products is undecided about which base to use in estimating uncollectible accounts On December 31, 2015, the balance in Accounts Receivable was $680,000 and net credit sales amounted to $3,800,000 during 2015 An aging analysis of the accounts receivable indicated that $40,000 in accounts a...

1 Percentageofsales basis The following adjusting entry would be the same reg ...

Megan's Products is undecided about which base to use in estimating uncollectible accounts. On December 31, 2015,

Question:

Megan's Products is undecided about which base to use in estimating uncollectible accounts. On December 31, 2015, the balance in was $680,000 and net credit sales amounted to $3,800,000 during 2015. An aging analysis of the indicated that $40,000 in accounts are expected to be uncollectible. Past experience has shown that about 1% of net credit sales eventually are uncollectible.
Prepare the adjusting entries to record estimated bad debt expense using the
(1) Percentage-of-sales basis and
(2) The percentage-of-receivables basis under each of the following independent assumptions:

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...