Answer Happy

PROBLEM 1 The ledger of Gold Company at the end of the current year shows Accounts Receivable $80,000; Credit Sales $810,000; and Sales Returns and Allowances $40,000. Instructions: (a) If Gold uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Gold determines that Elk Company's $600 balance is uncollectible. (b) If Allowance for Doubtful Accounts has a credit balance of $1,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 10% of accounts receivable. (c) If Allowance for Doubtful Accounts has a debit balance of $700 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 8% of accounts receivable.