On December 31, 2019, the Unadjusted Trial Balance of Tarzwell $\$ 200,000$

question 103

Essay

On December 31, 2019, the unadjusted trial balance of Tarzwell Services showed the following balances: Accounts receivable $\$ 200,000$
Allowance for doubtful accounts $1,000 \mathrm { ~Cr }$ .
Sales $700,000$ The business has given up trying to collect $5,000 of its accounts receivable but has not yet recorded the write-off entry. The firm uses the allowance method to estimate bad-debt expense.
a)Provide the entry for the write-off.
b)If the firm uses the percent-of-sales allowance method for recording bad-debt expense, and has experienced an average 6% rate of non-collection based on sales, provide the entry to record bad-debt expense for 2019.
c)Assume that after the firm recorded the $5,000 of write-offs, it determined that 18% of its remaining accounts receivable will be uncollectible under the aging method. Provide the entry to record bad-debt expense.

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Definitions:

Intrinsic Value

The perceived or calculated value of a company, stock, currency, or product determined through fundamental analysis without reference to its market value.

Cash Proceeds

The amount of money received from a transaction, often from the sale of assets or securities.

Expected Growth Rate

Represents the anticipated annual rate at which an investment, company, or economy will grow over a specified period.

Rate of Return

The gain or loss of an investment over a specific period, expressed as a percentage of the investment's initial cost.