M8-9 (Algo) Recording Bad Debt Estimates Using the Two Estimation Methods [LO 8-2] Assume that Simple Company had credit sales of $280,000 and cost of goods sold of $165,000 for the period. It estimates that 2 percent of credit sales in uncollectible accounts when it uses the percentage of credit sales method and it estimates that the appropriate ending balance in the Allowance for Doubtful Accounts is $6,900 when it uses the aging method. Before the end-of- period adjustment is made the Allowance for Doubtful Accounts has a credit balance of $400 Required: 1. Prepare the journal entry to record the end-of-period adjustment for bad debts under the la percentage of credit sales method and (b) aging of accounts receivable method 2. Which of these methods is required by GAAP? Journal entry worksheet Record the end-of-period adjustment for bad debts under the aging of accounts receivable method. Note: Enter debits before credits. Transaction General Journal Debit Credit b