Choices Clothing uses the percent-of-sales method at interim periods and then at the end of each year it uses the percent-of-accounts-receivable method for financial statement reporting purposes. Choices Clothing completed the following selected transactions during 2022 and 2023:

Choices records all amounts to the nearest cent. Present all amounts to two decimal places.

Required

1. Open three-column general ledger accounts for Allowance for Doubtful Accounts and Bad Debt Expense. Keep running balances.

2. Journalize the transactions in the general journal and post to the two ledger accounts.

3. The December 31, 2023, balance of Accounts Receivable is $501,000. Show how Accounts Receivable would be reported at that date.

4. Assume that Choices Clothing begins aging its accounts on December 31, 2023. The balance in Accounts Receivable is $501,000, the credit balance in Allowance for Doubtful Accounts is $31,975, and the company estimates that $32,000 of its accounts receivable will prove uncollectible.

a. Make the adjusting entry for uncollectibles.

b. Show how Accounts Receivable will be reported on the December 31, 2023, balance sheet.

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2022 Jun. 30 Dec. 31 31 2023 Feb. 17 Jun. 30 Jul. 29 Sep. 6 Oct. 21 Dec. 31 31 31 Estimated that bad debt expense for the first half of the year was 1.5 percent of credit sales of $748,000. Estimated that the Allowance for Doubtful Accounts balance at year end should be 5 percent of accounts receivable of $448,800 and recorded the appropriate journal entry at that time. Made the closing entry for the bad debt expense account. Sold inventory to Bruce Jones, $1,412, on credit terms of 2/10, n/30. Ignore the cost of goods sold. Estimated that bad debt expense for the first half of the year was 1 percent of credit sales of $860,000. Wrote off Jones's account as uncollectible after repeated efforts to collect from the customer. Received $1,150 from Bruce Jones, along with a letter stating his intention to pay his debt in full within 45 days. Reinstated the account in full. Received the balance due from Jones. Made a compound entry to write off the following accounts as uncollectible: Sean Rooney, $1,610; Sargent Ltd., $3,075; and Linda Lod, $11,580. Estimated that the Allowance for Doubtful Accounts balance at year end should be 5 percent of accounts receivable of $639,500 and recorded the appropriate journal entry at that time. Made the closing entry for the bad debt expense account.