Assume the company estimates that 5% of its accounts receivable will never be collected. a. Prepare the proper journal entry to recognize the expense

Assume the company estimates that 5% of its accounts receivable
will never be collected.
a. Prepare the proper journal entry to recognize the expense
involved.
Bad Debts Expense                        2,000
Allowance for Doubtful Accounts                 2,000

b. Present the balances in Accounts Receivable and Allowance for
Doubtful Accounts as they would appear on the balance sheet.
Also show the net realizable Accounts Receivable.

Accounts Receivable .................................................$800,000
Less: Allowance for Doubtful Accounts ........ 40,000
Estimated Realizable Accounts Receivable .$760,000

Under assumptions 1 and 2 above, give the proper journal entries for

the following events.

 June 3 John Shifty, who owes us $500, informs us that

he is broke and cannot pay. We believe him.

 Nov. 9 We learned that John Shifty has won the lottery and

is willing to pay off all his old debts

.

June 3 Allowance for Doubtful Accounts............. 500

Accounts Receivable, John Shifty.......                             500

Nov. 9 Accounts Receivable, John Shifty............ 500

Allowance for Doubtful Accounts........                            500