Harney Inc. uses the percentage of credit sales method of estimating doubtful ac

Question

Harney Inc. uses the percentage of credit sales method of estimating doubtful accounts. The Allowance for Doubtful Accounts has an unadjusted credit balance of $6,500 and the company had $330,000 of net credit sales during the period. Harney has experienced bad debt losses of 6% of credit sales in prior periods. After making the adjusting entry for estimated bad debts, what is the ending balance in the Allowance for Doubtful Accounts account?

Harney Inc. uses the percentage of credit sales method of estimating doubtful accounts. The Allowance for Doubtful Accounts has an unadjusted credit balance of $6,500 and the company had $330,000 of net credit sales during the period. Harney has experienced bad debt losses of 6% of credit sales in prior periods. After making the adjusting entry for estimated bad debts, what is the ending balance in the Allowance for Doubtful Accounts account?

Explanation / Answer

Harney Inc. All Amounts in $ Opening Balance in Allowance for Doubtful Debts -6500 Estimated bad debts during the period @ 6% of net sales -19800 Closing Balance in Allowance for Doubtful Debts -26300

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