Hirdt co. uses the percentage- of - receivables basis to record bad debt expense

Question

Hirdt co. uses the percentage- of - receivables basis to record bad debt expense and concludes that 3 % of accounts receivable will become uncollectible. Accounts receivable are $512,200 at the end of the year,and the allowance for doudtfil accounts has credit balance of $ 2,550.( credit account tities are automatically indental when amount is entered, Do not indent manally.) Prepare the adjusting Journal entry to record bad debt expense for the year. If the allowance for doubtful accounts had a debit, balance of $830 instead of a credit balance of $2.550. prepare the adjusting Journal entry for bad debt expense. Click If you would like to Show Work for this question:

Explanation / Answer

Estimated bad debts = 512,200@3% = 15,366

Adjustment required when credit balance 15,366- 2,550 = $12,816

Adjustment required when debit balance 15,366 + 830 = $16,196

Bad debts expense 12,816 To allowance for bad debts 12,816 Bad debts expense $16,196 To allowance for bad debts $16,196

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