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What is the journal entry to account for this assumption

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Question

Answer the following two questions:

1) ABC Company has sales of $250,000 annually, an A/R balance of $26,000, and a current allowance for doubtful accounts balance of $1,300. It is January 1, 20xx. Management needs to adjust the balance to this coming year's numbers. Management has decided to use the balance sheet method and assumes that 10% of A/R will be uncollectible. What is the journal entry to account for this assumption? What will the bad debt expense be on the income statement this year?

2) Using an amortization table, please prepare the journal entries using the following facts. ABC Company received a promissory note from one of its clients. The note was for 90 days and interest compounded monthly. The interest rate was 3% and the face value of the note was $10,000. How much interest did ABC earn on the note assuming was paid.

Reference no: EM132386213

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