Emma's Clothes,Inc

Essay

Emma's Clothes,Inc.has accounts receivable of $210,000.In the current economy,she has noticed an increase in uncollectible accounts.In 2016,her sales were $3,200,000 and in 2017,sales were $3,800,000.She has estimated in the past that 2% of sales would eventually be uncollectible.Emma believes that her losses were closer to 3% last year.She has recorded bad debt expense of 2% for 2017.Does she need to make a retroactive correction for 2016,and should she add an additional adjustment to 2017? If so,write the journal entry for the year-end adjustment.