Marigold Corp.'s account balances at December 31, 2020 for Accounts Receivable and the related Allowance for Doubtful Accounts are $917000 debit and $1920 credit, respectively. From an aging of accounts receivable, it is estimated that $42000 of the December 31 receivables will be uncollectible. The necessary adjusting entry would include a credit to the allowance account for

Question

Sara Edwards

Business

4 July, 12:09

Marigold Corp.'s account balances at December 31, 2020 for Accounts Receivable and the related Allowance for Doubtful Accounts are $917000 debit and $1920 credit, respectively. From an aging of accounts receivable, it is estimated that $42000 of the December 31 receivables will be uncollectible. The necessary adjusting entry would include a credit to the allowance account for

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Bambi · Answer 1

The necessary adjusting entry would include a credit to the allowance account for $40080

Explanation:

Marigold Corp.'s Account Balances

At December 31, 2020

Accounts Receivable $917000 Debit

Allowance for Doubtful Accounts $1920 credit

Bad Debts $42000

Unadjusted Balance of Uncollectibles $ 1920

Estimated Balances $ 42000

Required Adjustment $ 40080

The data tells that the Allowance for Doubtful Accounts has a credit balance of $1920 the required adjustment to the allowance for doubtful accounts is $ 40080. The required entry is

Bad debts Expense 40,080 Dr.

Allowance for Doubtful Accounts $40,080 credit