Anzlyzing financial statement effects of accounting for bad debits using the allownace method.
Duffy Bros. uses the allowance method to account for bad debets expense. Duffy experienced the following four events in 2008:
1.Recognition of 64,000 of service revenue on account
2. Collection of 56,000 cash from accounts receievable
3. Determination that 900 of its accoutns were not collectible and wrote off these receivables.
4. Recogition of bad debits expense for the year. Duffy estimates that bad debits expense will be 2 percent of its sales
1. Debit Accounts receivable 64,000
Credit Service Revenue 64,000
2. Debit Cash 56,000
Credit Accounts receivable 56,000
3. Debit Allowance for Doubtful accounts 900
Credit Accoutns receivable 900
4. I don't know
Are those right? Please help me.