The J.T. Traverse Company is well known for its Traverse pens. The company recen

Question

The J.T. Traverse Company is well known for its Traverse pens. The company recently reported the following amounts in its unadjusted trial balance as of December 31. Debits $ 34,691,000 Credits Accounts Receivable Allowance for Doubtful Accounts Sales Revenue $ 960,000 162,312,000 Required: 1. & 2. Prepare the adjusting journal entry required at December 31 for recording Bad Debt Expense. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) (1) Assume Traverse uses 1/2 of 1 percent of sales to estimate its bad debt expense for the year. TIP: The percentage of credit sales method directly calculates Bad Debt Expense. (i) Assume instead that Traverse uses the aging of accounts receivable method and estimates that TIP: The aging of accounts receivable method focuses on calculating what the adjusted Allowance for Doubtful Accounts balance should be. You need to consider the existing balance when determining the adjustment.

Explanation / Answer

1 31-Dec Bad debts expense 811560 =162312000*0.5%       Allowance for Doubtful accounts 811560 2 31-Dec Bad debts expense 63000 =1023000-960000       Allowance for Doubtful accounts 63000 3 31-Dec Bad debts expense 1033850 =1023000+10850       Allowance for Doubtful accounts 1033850 4 1 Allowance for Doubtful accounts 10000       Accounts Receivable 10000

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