Ruygrok Corp. $($Ruygrok$)$ is primarily a wholesaler of kitchenware products but also sells the items on a retail basis to consumers through a small shop in commercial clients, which represent $95\%$ of its business, are made on $30-$day trade terms. The remaining $5\%$ are sold for cash from its on$-$premises retail For the first three quarters of the year, Ruygrok estimates its allowance for doubtful accounts $($ADA$)$ at $1\mathrm{.}5\%$ of credit sales. At year$-$end, Ruygrok uses the required ADA that it reports on its balance sheet.

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Required

a$.$ Record the journal entry to record the estimate of bad debt expense for the quarter ending March $31.$

b$.$ Prepare a summary journal entry to record the writing off of the bad debts during the year.

c$.$ Prepare summary journal entries to record the recovery of bad debts previously written off.

d$.$ Record the journal entry to record the estimate of bad debt expense for the year$-$ended December $31.$

e$.$ Ruygrok currently estimates its bad debt expense for its first three quarters at $1\mathrm{.}5\%$ of credit sales. Was this a reasonable proxy for its bad debt expense for the year, or should Ruygrok adjust it$?$ Why or why not?

Answer rating: 100% (QA)

Answer To solve this problem we need to use the provided information and financial data to record the necessary journal entries related to the allowance for doubtful accounts and bad debt expense a Re... View the full answer