Ask Question
25 September, 18:29

Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment), and bad debt expense is estimated at 3% of credit sales. If credit sales are $300,000, the amount of the adjusting entry to record the estimated uncollectible accounts receivable is

+4
Answers (1)
  1. 25 September, 18:50
    0
    Adjusting entry to record the estimated uncollectible accounts receivable is:

    Debit Bad debt expense $8,500

    Credi Allowance for doubtful accounts $8,500

    (To record bad debt expense for the year)

    Explanation:

    The company uses percentage of credit sale to arrive at an estimated amount of accounts receivable that is deemed irrecoverable.

    3% of credit sales of $300,000 = $9,000

    Since there is an existing credit balance of $500 in the allowance for doubtful accounts, in order to reinstate the balance in that account to $9,000, we need to remove the existing balance from the calculated estimate. Therefore, $9,000 - $500 = $8,500 becomes the necessary adjustment to Bad debt expense.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment), and bad debt expense is estimated ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers