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    Journal entries for Bad debt expense; net AR at end of 2008

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    Belkou Company began operations on January 1, 2007. Its first year's sales were $1,140,000, which were 70% on credit. During the year, $740,000 was collected from customers on account, and the company wrote off accounts worth $2,600. At the end of the year, management estimated that 0.5% of all credit sales would probably be uncollectible.

    During 2008, sales were $1,440,000 (75% on credit), collections on account were $1,040,000, and write-offs of receivables were $4,700.

    At the end of 2008, after reviewing its experience with write-offs of accounts receivable thus far,management decided that its estimate of uncollectibility should be increased from 0.5% to 0.6% of the credit sales.

    1. Give the journal entries to record the bad debts expense for 2007 and 2008.

    2007 Bad debt expense [ ]
    Allowance for doubtful accounts [ ]
    2008 Bad debt expense [ ]
    Allowance for doubtful accounts [ ]

    2. What is the net amount of accounts receivable at the end of 2008? [ ]

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    Journal entries for bad debt expenses are examined. The receivables for sales are determined.