Bad debts analysis-Allowance account On January 1, 2019, the balance in Kubera Co.'s Allowance for Bad Debts account was $25,160. During the year, a total of $65,700 of delinquent accounts receivable was written off as bad debts. The unadjusted balance in the Allowance for Bad Debts account at December 31, 2019, was $30,440. As the result of a comprehensive analysis, it is determined that the December 31, 2019, balance of the Allowance for Bad Debts account should be $19,000. Show the adjustment required in the horizontal model or in journal entry format.

Debit Allowance for bad debt account $11,440

Credit Accounts receivables $11,440

Being entries to recognized bad debts previously provided for.

Explanation:

The allowance for bad debt is an account used to estimate how much of the receivables recorded by an entity may become uncollectible. Once determined, the company would post a debit entry to the bad debt account and a credit entry to the allowance for bad debts account.

Given that;

Opening balance in the Allowance for Bad Debts account was $25,160 and during the year, a total of $65,700 of delinquent accounts receivable was written off as bad debts while unadjusted balance in the Allowance for Bad Debts account at December 31, 2019, was $30,440. This means that

$25,160 + x = $30,440

x = $30,440 - $25,160 = $5,280

where x was the net addition to the allowance for bad debt during the year.

If it is determined that the December 31, 2019, balance of the Allowance for Bad Debts account should be $19,000, then the difference between the unadjusted balance and the determined balance will be posted. This difference is

= $30,440 - $19,000

= $11,440

In the journal entries format, adjustments required would be

Debit Allowance for bad debt account $11,440

Credit Accounts receivables $11,440

Being entries to recognized bad debts previously provided for.