At December 31,2018,Pinebrook Inc

At December 31,2018,Pinebrook Inc.reported $135,000 in accounts receivable and $9,300 in the allowance for doubtful accounts.In 2019,the company had $875,000 in credit sales and collected $915,000 on accounts receivable.Pinebrook also wrote off $2,500 in uncollectable accounts.The company uses the aging method to estimate bad debts,and management has estimated that the allowance for doubtful accounts for December 31,2019 should be $8,800.
Required:
a.Provide the journal entry to record bad debts expense for the year 2019.(Ignore information contained in part (b)below. )
b.While auditing the books of Pinebrook,you discover that the company's bookkeeper has erroneously recorded a transaction: for one customer who went bankrupt in 2019,she wrote off the $6,800 receivable with a debit to bad debts expense.Determine the error's effects (overstated/understated)on the December 31,2019 balance sheet (accounts receivable,allowance for doubtful accounts)and the income statement for the year 2019.
c.In January 2020,the company factored all of its receivables ($95,000)without recourse for proceeds of $77,000.Present the journal entry to record this transaction.

Correct Answer:

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a.

Journal entry to record bad debts ...

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