Tanning Company uses the percentage of receivables method for recording bad debt
ID: 2359415 • Letter: T
Question
Tanning Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $300,000 and credit sales are $1,000,000. An aging of accounts receivable shows that 5% will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,000 before adjustment? a. Bad Debts Expense 13,000 Allowance for Doubtful Accounts 13,000 b. Bad Debts Expense 15,000 Allowance for Doubtful Accounts 15,000 c. Bad Debts Expense 13,000 Accounts Receivable 13,000 d. Bad Debts Expense 15,000 Accounts Receivable 15,000Explanation / Answer
Tanning Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $300,000 and credit sales are $1,000,000. An aging of accounts receivable shows that 5% will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,000 before adjustment?
a. Bad Debts Expense 13,000 Allowance for Doubtful Accounts 13,000
b. Bad Debts Expense 15,000 Allowance for Doubtful Accounts 15,000
c. Bad Debts Expense 13,000 Accounts Receivable 13,000
d. Bad Debts Expense 15,000 Accounts Receivable 15,000
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