Response to the following problem:
The following balances appear in the unadjusted trial balance of Fleming Corp. at its year-end, December 31, 2016:
Debit Credit
Account Balances $200,000
Accounts Receivable $ 10,000
Allowance for Uncollectible Accounts Sales (70% on credit) 1,200,000
Fleming uses the balance sheet method of calculating its allowance for doubtful accounts. At December 31, 2016, it estimated that three per cent of accounts receivable would not be collected. Fleming had the following transactions during 2017: a. It wrote off $18,000 of accounts receivable. b. Credit sales amounted to $1,600,000. c. Collections of accounts receivable amounted to $1,400,000. d. Fleming collected $4,000 that was previously written off in 2016. This amount is not included in the collections described in transaction c. e. At year-end, it was estimated that the amount of doubtful accounts at December 31, 2017 was $10,000.
Required:
1. Prepare all journal entries required for 2016 and 2017.
2. If Fleming had used the income statement method of estimating uncollectible accounts, calculate the balance in the Allowance for Doubtful Accounts general ledger account at December 31, 2016 and 2017. Assume that Fleming estimates doubtful accounts to be one per cent of sales for both years.