A company uses the percent of sales method to determine its bad debts expense. A

Question

A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts: Accounts receivable Allowance for uncollectible accounts Net Sales $356,000 debit 510 debit 801,000 credit All sales are made on credit. Based on past experience, the company estimates 0.5% of net credit sales to be uncollectible, what adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Explanation / Answer

Solution: Debit Bad expense $4,005; credit Allowance for Doubtful Accounts $4,005

Working:

Debit

Credit

Bad expense

4,005

Allowance for Doubtful Accounts

4,005

(801,000 * 0.5%)

?

?

Debit

Credit

Bad expense

4,005

Allowance for Doubtful Accounts

4,005

(801,000 * 0.5%)

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

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