A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year: Prepare the adjusting entry to estimate bad debts under each of the following separate situations.
1. Bad debts are estimated to be 2.5% of credit sales.
2. An aging analysis estimates that 8% of the outstanding accounts receivable will be uncollectible.

Question

A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year:  Prepare the adjusting entry to estimate bad debts under each of the following separate situations.
1. Bad debts are estimated to be 2.5% of credit sales.
2. An aging analysis estimates that 8% of the outstanding accounts receivable will be uncollectible.

A Company Had the Following Items and Amounts in Its