At December 31, 2009, Vizarro Company reports the following results for its calendar-year.
Cash sales . . . . . . . . . $2,184,700
Credit sales . . . . . . . . 3,720,000
In addition, its unadjusted trial balance includes the following items.
Accounts receivable . . . . . . . . . . . . . . . . . $1,127,500 debit
Allowance for doubtful accounts . . . . . . . . 29,030 debit
Required:
1. Prepare the adjusting entry for Vizarro Co. to recognize bad debts under each of the following independent assumptions.
a. Bad debts are estimated to be 1.5% of credit sales.
b. Bad debts are estimated to be 1% of total sales.
c. An aging analysis estimates that 3% of year-end accounts receivable are uncollectible.