The trial balance before adjustment of Risen Company reports the following balances:
nstructions
(a) Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be 6% of gross accounts receivable.
(b) Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $5,000 instead of a credit balance. How will this difference affect the journal entries in part (a)?
(c) what is the theoretical justification for the percentage -of-recievables method used to estimate bad debts?
