Clarissa Company has credit sales of $550,000 during 2011 and estimates at the end of 2010 that 2.5 percent of these credit sales will eventually default. Also, during 2011 a customer defaults on a $775 balance related to goods purchased in 2010. Prior to the write off for the $775 default, Clarissa?s accounts receivable and allowance for doubtful accounts balances were $402,000 and $129 (credit), respectively.
1. Prepare the journal entry to record the defaulted account.
2. Prepare the adjusting entry to record the bad debt expense for 2011.
This question was answered on: Jul 11, 2017
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