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(Bad Debt Adjustment) The balance in accounts receivable at December 31 was $260,000. The allowance account...

(Bad Debt Adjustment)

The balance in accounts receivable at December 31 was $260,000. The allowance account has a debit balance of $7,500 before the year end adjustment. Sales for the year were $985,000. Prepare the adjusting entry for each of the following independent situations:

a. 3% of outstanding accounts receivable are uncollectible

b. 1.5% of sales are uncollectible

c. An aging of the accounts show that $8,000 of the accounts receivable are uncollectible

Solutions

Expert Solution

a Bad Debt Expense Dr                  300
   Allowance for Doubtful Accounts Cr                    300
260000 * 3% - 7500
b Bad Debt Expense Dr              7,275
   Allowance for Doubtful Accounts Cr                 7,275
985000*1.5% - 7500
c Bad Debt Expense Dr              8,000
   Allowance for Doubtful Accounts Cr                 8,000
Total Allowance for Doubt ful debt (7500+8000)

ekkarill92 answered 2 years ago
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