29 Jun Question Stine Company has accounts
Question
Stine Company has accounts receivable of $95,400 at December 31, 2017. Credit sales for 2017 totaled $80,000. An analysis of the accounts shows these amounts. There is a $2,100 credit balance in the Allowance for Doubtful Accountsbeforeadjusting entries.
Age of Accounts Amount Estimated Percentage
Uncollectible
Current $77,000 2%
Less than 120 days 11,000 5%
Greater than 120 days 7,400 30%
$95,400
Required:
Prepare the necessary journal entries related to uncollectible accounts for each of the followingindependent assumptions.
A. Assume that Stine Company uses the aging method to record bad debt expense. Record 2017 bad debt expense using the aging method.
B. Assume that Stine Company uses the percentage of credit sales method and estimates that 3% of credit sales will become uncollectible. Record bad debt expense using the percentage of credit sales method.
C. Assume that on January 16, 2018, Stine Company determined that J. Byrd’s account was uncollectible and wrote off $200.
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