Estimating Bad Debts Journal Entry Problem: $(2$pts $-$ Completed Journal Entries$)$

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As of January $1,2021,$ the balance sheet of Bearwood Company has an Accounts Receivable balance of $$175,000$ and an unadjusted credit balance in the Allowance for Doubtful Accounts of $$40,000.$

a$.$ Sales on account for $$150,000.$

b$.$ Sales returns and allowances for $$65,000.$

c$.$ Collections from customers for $$125,000.$

d$.$ Customer account balances written off for $$55,000.$

e$.$ Previously written off customer account balances for $$30,000$ were collected.

f$.$ Prepare the adjusting journal entry to estimate bad debt as of December $31,2021$:

$1$: The company uses the percentage of receivables method to estimate bad debt expense.

$2$: Bearwood Company estimates that uncollectible account balances are expected to be $20\%$ of total accounts receivable as of December $31,2021.$

$1-$Prepare journal entries in proper format.

a$.$ Account Name

Debit

Credit

Sales on account for $$150,000.$

b$.$ Account Name

Debit

Credit