The following selected amounts are reported on the year-end unadjusted trial bal
ID: 2594575 • Letter: T
Question
The following selected amounts are reported on the year-end unadjusted trial balance report for a company that uses the percent of sales method to determine its bad debts expense. Accounts receivable Allowance for Doubtful Accounts Net Sales $ 435,000 Debit 1,250 Debit 2,100,000 Credit All sales are made on credit. Based on past experience, the company estimates 1% of credit sales to be uncollectible, what adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?Explanation / Answer
Answer is Debit Bad Debt Expense $22250, credit allowance for doubtful accounts $22250
Particulars Amt Bad Debt (2100000 x 1%) 21000 Debit balance in alowance 1250 Bad Debt Expense 22250