At December 31, the balance in Bauer Company\'s allowance for uncollectible acco

Question

At December 31, the balance in Bauer Company's allowance for uncollectible accounts, before adjustment, was $1,400. Bauer Company uses the income statement approach to estimate bad debts expense and expects 2% of credit sales to be uncollectible. During the current year Bauer had $275,000 in credit sales. What adjusting entry would the company make to record bad debts expense for the year? O Allowance for Uncollectible Accounts $4,100 Accounts Receivable $4,100 O Bad Debts Expense $4,100 Allowance for Bad Debts $4,100 - Bad Debts Expense $5,500 Allowance for Uncollectible $5,500 O Bad Debts Expense $5,500 Allowance for Bad Debts $5,500

Explanation / Answer

Total Credit Sales = $275,000

Bad debt = 2% of $275,000 = $5,500

Balances in uncollectible account = $1,400

Net Adjustmenet = $5,500 - $1,400 = $4,100

Entry Would be :

Bad Debts Expenses    $4,100

Allowance for Bad Debts    $4,100

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