A Company Had the Following Items and Amounts in Its

question 109

Essay

A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year:
$\begin{array} { l l c } & \text { Debit } & \text { Credit } \\ \text { Cash sales } & & \$ 188,000 \\\text { Credit sales } & & 275,000 \\\text { Accounts receivable } & \$ 76,000 & \\\text { Allowance for doubtful accounts } & & 1,000\end{array}$ Prepare the adjusting entry to estimate bad debts assuming bad debts are estimated to be 2.5% of credit sales.

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Definitions:

Payment

The transfer of money, goods, or services in exchange for a product, service, or fulfillment of a legal obligation.

Sole Proprietorship

A business where the sole owner is responsible for the management and the debts of the business.

Table Router

A power tool used for woodworking that combines the functionalities of a router and a stationary table, allowing for precise routing operations.

Hardwood

A type of wood that comes from angiosperm trees, distinguished by its dense and durable qualities, often used in furniture, flooring, and construction.