For each transaction listed in E8-1, indicate the amount and direction (or ) of effects on the financial statement accounts and on the overall accounting equation.

E8-1

Blackhorse Productions, Inc., used the aging of accounts receivable method to estimate that its Allowance for Doubtful Accounts should be $ 19,750. The account had an unadjusted credit balance of $ 10,000 at that time.

Required:

Prepare journal entries for each of the following.

a. The appropriate bad debt adjustment was recorded.

b. Later, an account receivable for $ 1,000 was determined to be uncollectible and was written off.