M8-8 and M8-7

Use + for increase Using the following categories, indicate the effects of the following Liabilities Stockholders' Equity a During the period, customer balances are written off in the amount of $10,000. b. At the end of the period, bad debt expense is estimated to be $8,000. Bad Debts Using the Percentage of Credit Sales Method Assume Simple Co. had credit sales of $250,000 and cost of goods sold of $150,000 for the period. Simple uses the percentage of crodit sales method and estimates that 1 percent of credit sales would result in uncollectible accounts. Before the end-of-period adjustment is made, the Allow- ance for Doubtful Accounts has a credit balance of $250. What amount of Bad Debt Expense would the company record as an end-of-period adjustment? Estimating Bad Debts Using the Aging Method Assume that Simple Co. had credit sales of $250,000 and cost of goods sold of $150,000 for the period. Simple uses the aging method in the Allowance for Doubtful Accounts is $3,000. Before the end-of-period adjustment is made the Allowance for Doubtful Accounts has a credit balance of $250. What amount of Bad Deb Expense would the company record as an end-of-period adjustment? and estimates that the appropriate ending balance 8.9 Recording Bad Debt Estimates Using the Two Estimation Methods Using the information in M8-7 and M8-8, prepare the journal entry to record the end-of period djustment for bad debts under the (a) percentage of credit sales method and tb aging of receivable method. Which of these methods is required by GAAP nts