At December 31, 2010, the trial balance of Olpe Company contained the following amounts before adjustment.
- Debits Credits
- Accounts receivable $200,000
- Allowance for doubtful accounts $1,500
- Sales 875,000
a.repare the adjusting entry at December 31, 2010, to record bad debts expense assuming that the aging schedule indicates that $10,800 of accounts receivable will be uncollectible.
(b) Repeat the above assuming that instead of a credit balance there is a $1,500 debit balance in the Allowance for Doubtful Accounts.
(c) During the next month, January 2011, a $2,700 account receivable is written off as uncollectible. Prepare the journal entry to record the write-off.
(d) Repeat the above part assuming that Olpe uses the direct write-off method instead of the allowance method in accounting for uncollectible accounts receivable.