Use the following information to answer the next two questions: Q14 and Q15. The Cavallas Co. had the following balances in selected accounts on 12/31/10. Balances in Selected Accounts: Account Debit Credit Accounts receivable 100,000 Allowance for doubtful accounts 1,000 Bad Debt Expense 0 Sales 500,000 Sales returns 50,000 14. The company estimates that 4% of Accounts Receivable will never be collected. The adjusting journal entry to record the estimate of bad debt expense is:

Question

Virginia Bridges

Business

20 July, 00:35

Use the following information to answer the next two questions: Q14 and Q15. The Cavallas Co. had the following balances in selected accounts on 12/31/10. Balances in Selected Accounts: Account Debit Credit Accounts receivable 100,000 Allowance for doubtful accounts 1,000 Bad Debt Expense 0 Sales 500,000 Sales returns 50,000 14. The company estimates that 4% of Accounts Receivable will never be collected. The adjusting journal entry to record the estimate of bad debt expense is:

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Answers (1)

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Cherry · Answer 1

Debit bad debt with $4,000, and credit Accounts receivable also with $4,000.

Explanation:

New bad written off = Accounts receivable * 4% = $100,000 * 4% = $4,000

The journal entries will be as follows:

Details Dr ($) Cr ($)

Bad debt 4,000

Accounts receivable 4,000

Being a bad written off the accounts receivable