On September 30, Emerson Co. has $540,250 of accounts receivable. Emerson uses the direct method of accounting for bad debts and has an existing credit balance in the allowance for doubtful accounts of $13,750. 1. Prepare journal entries to record the following selected October transactions. The company uses the perpetual inventory system. 2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its October 31 balance sheet.
a. Sold $325,000 of merchandise (that cost $178,500) to customers on credit.
b. Received $425,100 cash in payment of accounts receivable.
c. Wrote off $16,700 of uncollectible accounts receivable.
d. In adjusting the accounts on October 31, its fiscal year-end, the company estimated that 3.0% of accounts receivable will be uncollectible.