Exercise $8-12$ Estimating bad debt expense$-$percentage of recelvables $$ LO$3$

CHECK FIGURE: d$.$ Accounts receivable $($net$)=$$$235,200$

Refer to the information in Exercise $8-11.$

Page $637$

Required

a$.$ Assume that Demron estimates uncollectible accounts as $2\%$ of receivables. Prepare the adjusting entry required on December $31,2023$ to estimate uncollectible receivables.

b$.$ During $2024,$ credit sales were $$620,000($cost of sales $$406,500)$; sales discounts taken were $$12,000$; accounts receivable collected were $$440,000$; and accounts written off during the year totalled $$10,000.$ Prepare the entries to record these transactions.

c$.$ Record the adjusting entry required on December $31,2024$ to estimate uncollectible receivables, assuming it is based on $2\%$ of receivables.

d$.$ Show how accounts receivable would appear on the December $31,2024$ balance sheet.

Analysis Component:

Comment on the advantages and disadvantages of using the balance sheet approach for estimating uncollectibles.