A Company That Uses the Allowance Method to Account for Its

question 100

Essay

A company that uses the allowance method to account for its bad debts had credit sales of $740,000 in 2013,including a $720 sale to Linda Paul.On December 31,2013,the company estimated its bad debts at 1.5% of its credit sales.On June 1,2014,the company wrote off as uncollectible the $720 account of Linda Paul; and on December 21,2014,Linda Paul unexpectedly paid her account in full.Prepare the necessary journal entries (a) on December 31,2013,to reflect the estimate of bad debts expense; (b) on June 1,2014,to write off the bad debt; and (c) on December 21,2014,to record the unexpected collection.

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Definitions:

Healthcare Reform

Efforts and policies implemented to improve, expand, or alter healthcare systems within a country to ensure more accessible, affordable, and quality healthcare services for the population.

Debt Ceiling

A legislative limit on the amount of national debt that can be incurred by the U.S. Treasury, thus limiting how much money the federal government may borrow.

Social Spending

Government expenditure on social programs that aim to improve the welfare of citizens, such as healthcare, education, housing, and social security.

Tea Party Activists

A political movement in the United States that began in 2009, advocating for lower taxes, reduced government spending, and a strict interpretation of the U.S. Constitution.