114) The December 31, 2011 unadjusted trial balance of Eel Creek Ltd. (Eel) disclosed the following balances:
Accounts receivable$400,000
Allowance for doubtful accounts 24,000 cr.
Net Credit Sales 1,400,000
Additionally, the firm has given up trying to collect on $19,000 from a customer who recently declared bankruptcy. Eel's management has not yet written off the amount but intends to do so before the company's books are closed for the year. The firm does not use the direct write-off method to estimate bad debt expense.
Provide the entry to record bad debt expense for 2011 assuming the firm uses the percentage of credit sales method for recording bad debt expense. On the average Eel has experienced a 8% rate of uncollectible accounts over the past 5 years.
115) What choices does a company have in writing off receivables?
116) Eloquent Media Ltd. completed the following transactions:
Sept. 14, 2010Provided services to Inga Corporation on account, $3,000, terms 30 days.
Oct. 14, 2010Accepted a 90-day, 8% note from Inga Corporation to settle its account.
Dec. 31, 2010Accrued interest on the note from Inga Corporation. (Round to the nearest dollar.)
Jan. 12, 2011Received amount due from Inga Corporation.
Record entries for the above transactions. (Use a 365-day year.)