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MacDougall BrothersThe income statement approach to estimating uncollectible accounts is used by MacDougall Brothers. OnJanuary 31 the firm had...
3. MacDougall BrothersThe income statement approach to estimating uncollectible accounts is used by MacDougall Brothers. OnJanuary 31 the firm had accounts receivable in the amount of $750 000. The Allowance for Doubtful Accountshad a credit balance of $5 250. The controller estimated that the uncollectible accounts expense wouldamount to one-half of 1% of the $4 500 000 of net sales made during January. This estimate was entered inthe accounts by an adjusting entry on January 31. On February 12, an account receivable from Carlotta Smithin the amount of $4 125 was determined to be worthless and was written off. However, on February 24, Smithwon several million dollars in the lottery and immediately paid her $4 125 past-due account. a) Prepare journal entries in general journal form for Jan. 31, Feb. 12, and Feb. 24.
