A Company That Uses the Percent of Sales to Account

Essay

A company that uses the percent of sales to account for its bad debts had credit sales of $740,000 in Year 1,including a $720 sale to Helen Sweet.On December 31,Year 1,the company estimated its bad debts at 1.5% of its credit sales.On June 1,Year 2,the company wrote off,as uncollectible,the $720 account of Helen Sweet.On December 21,Year 2,Helen Sweet unexpectedly paid her account in full.Prepare the necessary journal entries:
(a)On December 31,Year 1,to reflect the estimate of bad debts expense.
(b)On June 1,Year 2,to write off the bad debt.
(c)On December 21,Year 2,to record the unexpected collection.