Koss Co. Ltd. began operations on January 1, 2015. It had the following transactions during 2015, 2016, and 2017.
|
2015 |
Dec. |
31 |
Estimated uncollectible accounts as $5,000 (calculated as 2% of sales) |
|
2016 |
Apr. |
15 |
Wrote off the balance of N. Lang, $700 |
|
Aug. |
8 |
Wrote off $3,000 of miscellaneous customer accounts as uncollectible |
|
|
Dec. |
31 |
Estimated uncollectible accounts as $4,000 (1½% of sales) |
|
| 2017 |
Mar. |
6 |
Recovered $200 from N. Lang, whose account was written off in 2016; no further recoveries are expected |
|
Sept. |
4 |
Wrote off as uncollectible $4,000 of miscellaneous customer accounts |
|
|
Dec. |
31 |
Estimated uncollectible accounts as $4,500 (1½% of sales). |
Required:
- Prepare journal entries to record the above transactions.
- Assume that management is considering a switch to the balance sheet method of calculating the allowance for doubtful accounts. Under this method, the allowance at the end of 2017 is estimated to be $2,000. Comment on the discrepancy between the two methods of estimating allowance for doubtful accounts.
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