The following information is available for Murphy Company: Allowance for doubtfu
ID: 2362561 • Letter: T
Question
The following information is available for Murphy Company:Allowance for doubtful accounts at December 31, 2009 $8,000
Credit sales during 2010 400,000
Accounts receivable deemed worthless and written off during 2010 9,000
As a result of a review and aging of accounts receivable in early January 2011, however, it has been determined that an allowance for doubtful accounts of $5,500 is needed at December 31, 2010. What amount should Murphy record as "bad debt expense" for the year ended December 31, 2010?
Explanation / Answer
The Allowance for Doubtful Accounts is at Cr balance at the BEGINNING of the year at an amount of $8,000 Write offs is a Debit to the All for D.A. for $ 9,000 Therefore BEFORE the provision, the account has a DR bal of $1,000 The company wants to record $5,500 of the All for D.A. Since it has a debit of 1,000 we need an amount to have an allowance of 5,500, so we do the entry: Bad debt expense 6,500 (DR) Allowance for doubtful accounts (6,500). Answer: 6,500
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.