Intel Corporation is a well-known supplier of computer chips, boards, systems, and software building blocks. Assume the company recently reported the following amounts (in millions) in its unadjusted trial balance at its year-end of December 27, 2017: 

Required: 

1. Assume Intel uses ¼ of 1 percent of sales to estimate its Bad Debt Expense for the year. Prepare the adjusting journal entry required for the year, assuming no Bad Debt Expense has been recorded yet. 

2. Now assume that Intel uses the aging of accounts receivable method and estimates that $40 million of its Accounts Receivable will be uncollectable. Prepare the adjusting journal entry required at December 27, 2017, for recording Bad Debt Expense.

3. Repeat requirement 2, except this time assume the unadjusted balance in Intel’s Allowance for Doubtful Accounts at December 27, 2017, was a debit balance of $20 million.

4. If one of Intel’s main customers declared bankruptcy in 2018, what journal entry would be used to write off its $15 million balance?

Transcribed Image Text:

Debits Credits Accounts Receivable $1,729 Allowance for Doubtful Accounts 24 17 Sales (assurme all on credit) 37,586