Problem – Bank Reconciliation, journal entries, adjustments

At the end of the year, the M. I.
Wright Company showed the following selected account balances:

Sales (all on
credit)………………………………………………………………..$300,000
Accounts
Receivable…………………………………………………………….. 800,000
Allowance for
Doubtful Accounts……………………………………………. 38,000

Required:
1. Assume the company estimates that 1% of
all credit sales will not be collected.

a. Prepare the proper journal entry to recognize the expense involved.
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.
2. 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.
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.
3.
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.