Assume that a credit company had credit sales of $257,000 and cost of goods sold

Question

Assume that a credit company had credit sales of $257,000 and cost of goods sold of $157,000 for the period. This company uses the aging method and estimates that the appropriate ending balance in the Allowance for Doubtful Accounts is $3,700. Before the end-of-period adjustment is made, the Allowance for Doubtful Accounts has a credit balance of $320.

Assume that a credit company had credit sales of $257,000 and cost of goods sold of $157,000 for the period. This company uses the aging method and estimates that the appropriate ending balance in the Allowance for Doubtful Accounts is $3,700. Before the end-of-period adjustment is made, the Allowance for Doubtful Accounts has a credit balance of $320.

Explanation / Answer

Statement showing computations Particulars Amount Balance in the Allowance for Doubtful Accounts before adjustment          320.00 Required ending balance in the Allowance for Doubtful Accounts      3,700.00 Credit required to Allowance for doubtful accounts      3,380.00 This credit would be through bad debt expense Account] Journal Entry Particulars Dr Amt Cr Amt Bad debts Expense      3,380.00 To Allowance for doubtful Accounts                3,380.00

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