A Company That Uses the Allowance Method to Account for Its

question 87

Essay

A company that uses the allowance method to account for its bad debts had credit sales of $740,000 in 2015,including a $720 sale to Arbor Corporation.On December 31,2015,the company estimated its bad debts at 1.5% of its credit sales.On June 1,2016,the company wrote off as uncollectible the $720 account of Arbor Corporation; and on December 21,2016,Arbor Corporation unexpectedly paid her account in full.
Required:
Prepare the necessary journal entries dated: (a)on December 31,2015,to reflect the estimate of Bad Debt Expense; (b)on June 1,2016,to write off the bad debt; and (c)on December 21,2016,to record the unexpected collection.

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Definitions:

Sympathetic Nervous System

Part of the autonomic nervous system that prepares the body for action by triggering the fight-or-flight response.

Extremities

The farthest points or limits of something; in a physiological context, it refers to the limbs of the body (arms and legs).

Glial Cells

Non-neuronal cells in the central and peripheral nervous systems that support and protect neurons.

Nutritional Benefits

The positive health effects gained from consuming certain foods that are rich in vitamins, minerals, and other essential nutrients.