Craigmont uses the allowance method to account for uncollectible accounts. its year-end unadjusted trial balance shows accounts receivable of $108,500, allowance for doubtful accounts of $705 (credit) and sales of $945,000. if uncollectible accounts are estimated to be 0.7% of sales, what is the amount of the bad debts expense adjusting entry?

Question

Stanley Chung

Business

Today, 17:01

Craigmont uses the allowance method to account for uncollectible accounts. its year-end unadjusted trial balance shows accounts receivable of $108,500, allowance for doubtful accounts of $705 (credit) and sales of $945,000. if uncollectible accounts are estimated to be 0.7% of sales, what is the amount of the bad debts expense adjusting entry?

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Answers (2)

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Adalynn Richards · Answer 1

The answer is: $ 6,615.

Explanation:

If bad accounts are estimated at 0.7% of sales, and sales amount to $ 945,000, what you need to do is multiply $ 945,000 by 0.007 which is the result of dividing 0.7 by 100.

The amount of the entry for adjustment of expenses for bad debts would be: $ 945,000 x 0.007 = $ 6,615.

The answer is: $ 6,615.

Kingston Powers · Answer 2

Amount of bad debts adjusting entry = 0.7% * 945,000 = 0.7/100 * 9450,000 = $6,615

The amount of the bad debts expense adjusting entry = $6,615