In: Accounting
The following information is from the 2017 records of Lane Bicycle Shop:
Accounts receivable, December 31, 2017 |
$41,000 (debit) |
Allowance for Bad Debts, December 31, 2017 prior to adjustment |
1,500 (debit) |
Net credit sales for 2017 |
180,000 |
Accounts written off as uncollectible during 2017 |
20,000 |
Cash sales during 2017 |
27,000 |
Bad debts expense is estimated by the aging-of-receivables method. Management estimates that $6,000 of accounts receivable will be uncollectible. Calculate the ending balance of Allowance for Bad Debts, after the adjustment for bad debts expense, at December 31, 2017.
explain please
Allowance for doubtful debts will show a credit balance of $6000
Debit in P/L is calculated as follows
Allowance for doubtful debts required for next year 6000
Bad debts during the year 20000
Add Allowance for doubtful debts beginning of the year 1500
Total $ 27500
Beginning balance is usually deducted,Usually credit balance, but here the balance is debit so it is added