Check my work At each calendar year-end, Mazie Supply Co. uses the percent of ac
ID: 2406682 • Letter: C
Question
Check my work At each calendar year-end, Mazie Supply Co. uses the percent of accounts receivable method to estimate bad debts. On December 31, 2017, it has outstanding accounts receivable of $67.500, and it estimates that 5% will be uncollectible. Prepare the adjusting entry to record bad debts expense for year 2017 under the assumption that the Allowance for Doubtful Accounts has: (a) a $1,148 credit balance before the adjustment (b) a $338 debit balance before the adjustment. View tion list Journal entry worksheet Prepare the adjusting entry to record bad debts expense for year 2017 under the assumption that the Allowance for Doubtful Accounts has a $1,148 credit tCredit 3,375Explanation / Answer
Solution a:
Accounts receivable balance at year end = $67,500
Estimated uncollectible = $67,500 * 5% = $3,375
Existing credit balance in allowance for doubtful accounts = $1,148
Bad debts expense to be recorded for the year = $3,375 - $1,148 = $2,227
Solution b:
Accounts receivable balance at year end = $67,500
Estimated uncollectible = $67,500 * 5% = $3,375
Existing debit balance in allowance for doubtful accounts = $338
Bad debts expense to be recorded for the year = $3,375 + $338 = $3,713
Journal Entries - Maze Supply Company Date Particulars Debit Credit 31-Dec-17 Bad debts Expense Dr $2,227.00 To Allowance for doubtful accounts $2,227.00 (To record bad debts expense)