This problem continues the Draper Consulting situation from Problem 7-42 of Chapter 7

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P8-42 Accounting for uncollectible accounts using the allowance method
[15–20 min]

This problem continues the Draper Consulting situation from Problem 7-42 of
Chapter 7. Draper reviewed the receivables list from the January transactions (from
Chapter 6). Draper identified on February 15 that a customer was not going to pay
his receivable of $200 from December 9. Draper uses the allowance method for
receivables, estimating uncollectibles to be 5% of January credit sales.

Requirements

1. Journalize the entry to record and establish the allowance using the percentage
method for January credit sales.

2. Journalize the entry to record the identification of the customer’s bad debt.