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On December 31, 2019, the following were the balances in SRK Inc’s Trial Balance: Accounts Receivable:...

On December 31, 2019, the following were the balances in SRK Inc’s Trial Balance: Accounts Receivable: DR $107,250; Allowance for Doubtful Accounts: CR$1,900. What amount should be debited to Bad Debt Expense, assuming 6% of the outstanding Accounts Receivable at December 31, 2019 are still estimated to be uncollectible? Provide a journal entry to show the adjustment.

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Expert Solution

Date Accounts Name and Explanation Debit Credit
Dec . 31 2019 Bad Debt Expense          4,535
    Allowance for doubtful accounts          4,535
(To record bad debt expense)
Caluclation of bad debt expense
Step: 1 calculate closing amount of allowance for uncollectible account
Year end Accounts Receivable 107250
Bad debt estimate 6%
Proposed year end "allowance for doubtful accounts" 6435 (107250*6%)
Step 2: Amount already exists in ledger" allowance for uncollectible accounts"
Opening balance 1900
Less: Accounts Receivable written off 0
Add: Amount collected which was previously written off 0
Amount already exist 1900
Final Step : Bad debt expense (Difference of step 1 and 2) 4535

ekkarill92 answered 3 years ago
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