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E$6-22($Algo$)$ Recording, Reporting, and Evaluating a Bad Debt Estimate Using the Percentage of Credit Sales Method L$06-2$

During the current year, Bob's Ceramics Shop had sales revenue of $$156,000,$ of which $$69,000$ was on credit. At the start of the current year, Accounts Recelvable showed a $$18,000$ debit balance and the Allowance for Doubtful Accounts showed a $$1,600$ credit balance. Collections of accounts recelvable during the current year amounted to $$56,000.$

Data during the current year follow:

a$.$ On December $31,$ an Account Recelvable $($Toby$\text{'}$s Gift Shop$)$ of $$1,900$ from a prior year was determined to be uncollectible; therefore, It was written off Immedlately as a bad debt.

b$.$ On December $31,$ on the basis of experience, a decision was made to continue the accounting policy of basing estimated bad debt losses on $3\mathrm{.}0$ percent of credit sales for the year.

Requlred:

Prepare the requlred journal entries for the two Items on December $31,$ the end of the accounting perlod.

Show how the amounts related to Accounts Recelvable and Bad Debt Expense would be reported on the income statement and balance sheet for the current year. Disregard income tax considerations.

Complete this question by entering your answers in the tabs below.

Prepare the required journal entries for the two items on December $31,$ the end of the accounting period. $($If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.$)$

Journal entry worksheet

$1$

$2$

On December $31,$ an Account Receivable $($Toby$\text{'}$s Gift Shop$)$ of $$1,900$ from a prior year was determined to be uncollectible; therefore, it was written off immiediately as a bad debt.

Note: Enter debits before credits.

$\backslash$table$[[$Date$,,$Debit,Credit$],[,,$General Journal,$],[,,,],[,,,],[,,,],[,,,],[,,,]]$

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