Problem #2
Mesa Camping Equipment Company's balance sheet dated December 31, 2013 reported Accounts
Receivable of $400,000 and a credit balance in Allowance for Doubtful Accounts of $32,000. During 2014,
Mesa Camping Equipment had the following transactions: sales on account $1,500,000; sales returns and
allowances, $50,000; collections from customers, $1,250,000; accounts written off $36,000; previously written
off accounts of $6,000 were collected.
Instructions
(a) Prepare the journal entries for the 2014 transactions.
(b) If the company uses the percentage of sales basis to estimate bad debts expense and anticipates 3% of net
sales to be uncollectible, what is the adjusting entry at December 31, 2014?
(c)If the company uses the percentage of receivables basis to estimate bad debts expense and determines that
uncollectible accounts are expected to be 8% of accounts receivable, what is the adjusting entry at December
31, 2014?
GENERAL JOURNAL
DATE
ACCOUNT
DEBIT
CREDIT