Question
In: Accounting
A. The controller, Devin Hester, let Kristin know that the ending balance in the allowance for...
A. The controller, Devin Hester, let Kristin know that the ending balance in the allowance for doubtful accounts needs to be $129,000. The beginning balance in the Allowance for doubtful accounts on January 1st was a credit balance of $72,500. During the year, there were no bad debts written off and the current balance in bad debt expense is $0. What adjusting journal entry needs to be made?
Solutions
Expert Solution
-Allowance for Doubtful accounts is a contra asset account having a credit balance.
-This account increases when credited and decreases when debited.
-Question states that existing (or unadjusted) balance is $ 72,500
-It also says that required balance at the end of year (or Adjusted balance) should be $ 129,000
-This means that the account’s balance has to be increased by $ 56,500.
-As already discussed above, to increase a liability account (or contra asset) balance, it has to be credited.
-Hence, Allowance account has to be credited by $ 56,500.
-As per Allowance Method, Bad Debt Expense has to be debited by that amount. The complete ADJUSTING journal entry would be:
|
Accounts title |
Debit |
Credit |
|
Bad Debt Expenses |
$ 56,500.00 |
|
|
Allowance for Doubtful Accounts |
$ 56,500.00 |
|
|
(Bad Debt expense recorded) |
ekkarill92 answered 1 year agoRelated Solutions
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Equipment
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