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:

Launched

The act of starting or initiating something, such as a product in the market or a spacecraft into orbit, often with a formal event or announcement.

Depressed

A state characterized by feelings of severe despondency and dejection, often accompanied by a lack of energy and difficulty in maintaining interest in life.

Social Isolation

A state where an individual has limited or no interaction with others, leading to feelings of loneliness and social withdrawal.

Toni Antonucci

A psychologist known for her work in social relations and how they impact mental health and well-being across the lifespan.