Question

Windsor, Inc. had net sales in 2017 of $1,410,600. At December 31, 2017, before adjusting entries, the balances in selected accounts were Accounts Receivable $384,800 debit, and Allowance for Doubtful Accounts $1,814 debit. Assume that 11% of accounts receivable will prove to be uncollectible. Prepare the entry to record bad debt expense. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

1	Calculation of Estimated Credit Balance in Allowance for Doubtful Debts required at the end of year:-
a	Acounts Receivable	=	$384,800
b.	% accounts receivable estimated to be uncollectible	=	11.00%
c.	Estimated Credit Balance in Allowance for Doubtful Debts required (a*b)	=	$42,328
2	Calculation of Bad Debts Expense at the end of year:-
a	Estimated Credit Balance in Allowance for Doubtful Debts required		$                    42,328
b.	Current Balance in Allowance for Doubtful Debts (debit)		$                      1,814
c.	Bad debts Expense for the year (a+b)		$                    44,142
Date	General Journal		Debit	Credit
Dec 31	Bad debts Expense		$              44,142
	Allowance for Uncollectible Accounts			$44,142
	(To record the adjustment for unrecoverable accounts receivable)

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