Patterson Co. had a debit balance of $1,000 in its Allowance for Doubtful Accoun
ID: 2531182 • Letter: P
Question
Patterson Co. had a debit balance of $1,000 in its Allowance for Doubtful Accounts account on December 31,2015. Their net sales for the year totaled $700,000 and they had $100,000 in their Accounts Receivable account. If they estimate their Bad Debt for the year to be 10% of Accounts Receivable, their year end adjusting entry for Bad Debts would be: A. Debit Bad Debt Expense and credit Allowance for Doubtful Accounts for $9,000.
B. Debit Bad Debt Expense and credit Allowance for Doubtful Accounts for $70,000.
C. Debit Bad Debt Expense and credit Allowance for Doubtful Accounts for $10,000.
D. Debit Bad Debt Expense and credit Allowance for Doubtful Accounts for $11,000.
Explanation / Answer
Journal entry
So, answer is: D. Debit Bad Debt Expense and credit Allowance for Doubtful Accounts for $11,000.
Allowance for doubtful accounts as at year end ($100,000*10%) $ 10,000 Add: Opening debit balance $ 1,000 Baddebt expense for the year $ 11,000