Complete the following calculations and make the appropriate journal entries under each of section I, II, III, and IV.

I. Income statement approach to recording bad debt expense
Net credit sales		2,500,000		Net credit sales		2,500,000
Say 3% is the company's factor for bad debt				What if its a 2% factor
What is the Journal Entry				What is the Journal Entry
II. Balance sheet approach (aging) to record bad debt expense (See note below)
Total A/R	Current	1-30	31-60	61-90	>90
565,000	325,000	124,000	65,000	32,000	19,000
Management's Estimate	1%	3%	5%	10%	25%
Total uncollectible
Necessary total allowance		(sum of all categories)
			What is the Journal Entry
Allowance account balance now	6,850
Adjustment amount
What if allowance balance is 25,000?	25,000		What is the Journal Entry
Adjustment amount
Total A/R	Current	1-45	46-90	>90
508,000	290,000	110,000	68,000	40,000
Management's Estimate	2%	5%	8%	15%
Total uncollectible
Necessary total allowance		(sum of all categories)
			What is the Journal Entry
Allowance account balance now	17,500
Adjustment amount
			What is the Journal Entry
What if AFDA balance is 25,000?	25,000
Adjustment amount
III. Record the Write - off of $25,000 receivable.
Journal Entry
IV. Record the entries for collecting the above write-off.
Journal Entry to restore
Journal Entry to collect