c) Prepare the journal entry to record bad debts expense for 2010, assuming that an aging of accounts receivable indicates that expected bad debts are $115,000.
Just remember that the CREDIT balance in Allowance for Doubtful Accounts AFTER the adjustment must equal the expected Bad Debt Expense (115,000). Before the adjustment, the account had a credit balance of 80,000 - 90,000 + 24,000 = 14,000
Dr Bad Debt Expense 101,000
Cr Allowance for Doubtful Accounts 101,000
(d) Compute the accounts receivable turnover ratio for 2010.
Net Credit Sales / Average Accounts Receivable (Net)
Net Credit Sales = 3,200,000 - 50,000 = 3,150,000
Average Accounts Receivable (Net) [(960,000 - 80,000) + (1,234,000 - 115,000)] / 2 = 999,500
3,150,000 / 999,500 = 3.15 Times (accounts receivable turnover ratio)