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    Bad debts

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    The trial balance before adjustment of Estefan Inc. shows the following balances

    Accounts Receivable 80,000 debit
    Allowance for Doubtful Accounts 1,750 debit
    Sales( all on credit) 580,000 credit

    Give the entry for estimated bad debts assuming that the allowance is to provide for doubtful accounts on the basis of (a) 4% of gross accounts receivable and (b) 1% of net sales.

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    Solution Summary

    The solution explains how to compute bad debts and prepare the journal entries