The September 30, 2017, balance sheet of Nelson Products reported the following:
Accounts Receivable ........................................... $310,000
Allowance for Doubtful Accounts (credit balance) ........ 10,000
During the last quarter of 2017, Nelson Products completed the following selected transactions:
Dec. 30 Wrote off the following accounts receivable as uncollectible: Barry White, $2,500; Carlos Media, $2,200; and Doug Zabellos, $1,100.
31 Recorded bad debt expense based on the aging of accounts receivable, as follows:

Required
1. Record the transactions in the general journal.
2. Open the Allowance for Doubtful Accounts three-column ledger account and post entries affecting that account. Keep a running balance.
3. Most companies report two-year comparative financial statements. If Nelson Products' Accounts Receivable balance was $320,000 and the Allowance for Doubtful Accounts stood at $12,000 at December 31, 2016, show how the company will report its Accounts Receivable in a comparative balance sheet for 2017 and 2016.
4. Suppose, on December 31, the bad debt expense was based on an estimate of 4 percent of the accounts receivable balance rather than on the aging of accounts receivable. Record the December 31, 2017, entry for bad debt expense in the general journal.

Transcribed Image Text:

Age of Accounts Accounts Receivable1-30 Days 31-60 Days 61-90 Days Over 90 Days $179,000 $95,000 $37,500 $17,000 40.0% Estimated percent uncollectible 0.1% 0.3% 5.0%