Brown Cow Dairy uses the aging approach to estimate bad debt expense. The ending balance of each account receivable is aged on the basis of three time periods as follows:
(1) not yet due, $13,000;
(2) up to 120 days past due, $6,000; and
(3) more than 120 days past due, $5,500. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectibility is
(1) 2 percent,
(2) 12 percent, and
(3) 30 percent, respectively.
At December 31 (end of the current year), the Allowance for Doubtful Accounts balance is $710 (credit) before the end-of-period adjusting entry is made. Data during the current year follow:
A. During December, an Account Receivable (Patty's Bake Shop) of $660 from a prior sale was determined to be uncollectible; therefore, it was written off immediately as a bad debt.
B. On December 31, the appropriate adjusting entry for the year was recorded.
Required:
1. Give the required journal entries for the two items listed above.