Answer:
1.
Date Account Title Debit Credit
Dec. 31 Bad debt expense $9,000
Allowance for doubtful accounts $9,000
Working
= 3% * 300,000
= $9,000
2.
Date Account Title Debit Credit
Dec. 31 Bad debt expense $12,000
Allowance for doubtful accounts $12,000
Working
= 1% * total debt
= 1% * (900,000 + 300,000)
= $12,000
3.
Date Account Title Debit Credit
Dec. 31 Bad debt expense $12,500
Allowance for doubtful accounts $12,500
Working
= 6% * Accounts receivable
= 6% * 125,000
= $7,500
As the Allowance account is in debit, it means that bad debt exceeded the allowance so this balance needs to be added to properly cater for bad debts.
= 7,500 + 5,000
= $12,500
