At the end of the current year, using the aging of receivable method, management estimated that $22,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a credit balance of $445. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense

Question

Huggie

Business

8 August, 15:43

At the end of the current year, using the aging of receivable method, management estimated that $22,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a credit balance of $445. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense

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Alisa Richmond · Answer 1

Journal entry

Explanation:

The journal entry is as follows

Bad debt expense $22,305 ($22,750 - $445)

To Allowance for doubtful debts $22,305

(Being the bad debt expense is recorded)

While recording this transaction, we debited the bad debt expense as it increases the expenses account while at the same time it reduces the asset side of the balance sheet so the allowance would be credited