Principles of Accounting I What is the answer and how did you get that answer. T

Question

Principles of Accounting I

What is the answer and how did you get that answer. Thank you.

18. MC.09-076.ALGO

Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $292,000 and credit sales are $1,000,000. An aging of accounts receivable shows that approximately 3% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if Allowance for Doubtful Accounts has a credit balance of $2,800 before adjustment?

a.

b.

c.

d.

Bad Debt Expense $5,960       Allowance for Doubtful Accounts $5,960

Explanation / Answer

Allowance for doubtful accounts should be $8,760 ($292,000*3%). but already $2,800 credit balance is there in doubtful accounts. so now we have to pass adjustment entry for $5,960 ($8,760-$2,800)

Answer is A.

You can reach me over comment box if you have any doubts. Please rate this answer

Baddebt expenses $ 5,960 Allowane for doubtful accounts $ 5,960

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.