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Chapter_8_Example_1.pdf - C H A PT E R 8 – E X A M PL E 1 B...

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C H APT ER 8E X A MPL E 1BAD DEBTSOn December 31, 2011, Sunrise Hotel Corporation’s general ledger included thefollowing accounts:Credit Sales$800,000Cash Sales$350,000Accounts Receivable$250,000Direct Write-Off Method1.If the company uses thedirect write-off methodto account for bad debts,what journal entry would the company make in 2011?2.On May 21, 2012, it was determined that Fuller Grave’s account of $2,500was uncollectible.Write the journal entry to record this event.3.On October 3, 2012, Fuller Graves paid $1,500 on the account.No otheramounts from Fuller Graves are expected to be collected in the future.Recordthe journal entry.
AllowanceMethodsFor questions,47,assumebad debtsareestimated at 3% ofcreditsales.4.If the company uses the allowance method to account for bad debts and thecurrent allowance for doubtful accounts has a $6,000 credit balance, what journalentry would the company make in 2011?

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Term
Fall
Professor
FERRELL
Tags
Fuller Graves

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