PERCENT OF SALES METHOD

A/R 1,000,000
SALES 5,050,000 allowance for d/a
SALES RETURN 50,000 write-off - 20,000.00
ALLOWANCE FOR D/A 20,000 50,000.00
1% ESTIMATE OF SALES IS DOUTBFUL -
ending 70,000.00
DOUBTFUL ACCOUNT EXPENSE 50,000
ALLOWANCE FOR D/A (ADJUSTED) 70,000 (Required Allowance)

JOURNAL ENTRY
D/A EXPENSE 50,000
ALLOWANCE FOR D/A 50,000
or d/a
beginning
DA exp
recovery
 PERCENT OF A/R
A/R 1,000,000
SALES 5,050,000 allowance for d/a
SALES RETURN 50,000 write-off 0 20,000
ALLOWANCE FOR D/A 20,000 10,000
3% EST. OF A/R IS DOUTBFUL 0
ending 30,000
DOUBTFUL ACCOUNT EXPENSE 10,000
ALLOWANCE FOR D/A (ADJUSTED) 30,000

JOURNAL ENTRY
D/A EXPENSE 10,000
ALLOWANCE FOR D/A 10,000
beginning
DA exp
recovery
 A/R BALANCE EXPERIENCE REQUIRED
RATE (% of uncollectibility) ALLOWANCE
NOT DUE 500,000 1% 5,000
1-30 DAYS PAST DUE 300,000 2% 6,000
31-60 DAYS PAST DUE 200,000 4% 8,000
61-90 DAYS PAST DUE 100,000 7% 7,000
91-180 DAYS PAST DUE 50,000 10% 5,000
181-365 DAYS PAST DUE 30,000 30% 9,000
MORE THAN 1 YEAR 20,000 50% 10,000
1,200,000 50,000
DOUBTFUL ACCOUNT EXPENSE 44,000
ALLOWANCE FOR D/A (ADJUSTED) 50,000

JOURNAL ENTRY
D/A EXPENSE 44,000
ALLOWANCE FOR D/A 44,000
 allowance for d/a
10,000 beg.
write-off 5,000 44,000 d/a exp
1,000 recovery
ending 50,000