Refer to the information in Exercise 8-11.

Required

a. Assume that Demron estimates uncollectible accounts as 2% of receivables. Prepare the adjusting entry required on December 31, 2020 to estimate uncollectible receivables.

b. During 2021, credit sales were $620,000 (cost of sales $406,500); sales discounts taken were $12,000; accounts receivable collected were $440,000; and accounts written off during the year totalled $10,000. Prepare the entries to record these transactions.

c. Record the adjusting entry required on December 31, 2021 to estimate uncollectible receivables, assuming it is based on 2% of receivables.

d. Show how accounts receivable would appear on the December 31, 2021 balance sheet.

Analysis Component: Comment on the advantages and disadvantages of using the balance sheet approach for estimating uncollectibles.

Exercise 8-11

Selected unadjusted account balances at December 31, 2020, are shown below for Demron Servicing.

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Debit Account Credit Accounts receivable. Allowance for doubtful accounts $70,000 $ 1,100 480,000 Sales (all on credit). Sales discounts. 8,000