The November 30, 2023, balance sheet of Thyme Company reported the following:

At the end of each quarter, Thyme estimates bad debt expense to be 2 percent of credit sales. At the end of the year, the company ages its accounts receivable and adjusts the balance in Allowance for Doubtful Accounts to correspond to the aging schedule. During the last month of 2023, Thyme completes the following selected transactions:

Required

1. Record the transactions in the general journal.

2. Open the Allowance for Doubtful Accounts three-column ledger account and post entries affecting that account. Keep a running balance.

3. Most companies report 2-year comparative financial statements. If Thyme Company’s Accounts Receivable balance was $299,500 and the Allowance for Doubtful Accounts stood at $9,975 on December 31, 2022, show how the company will report its accounts receivable on a comparative balance sheet for 2023 and 2022.

4. Suppose, on December 31, 2023, the bad debt expense was based on an estimate of 3 percent of the accounts receivable balance rather than on the aging of accounts receivable. Record the December 31, 2023, entry for bad debt expense in the general journal.

Transcribed Image Text:

Accounts Receivable Allowance for Doubtful Accounts (credit balance) $358,000 7,700