out of 10 points On December 31, 2013, the balance in Accounts Receivable was $6

Question

out of 10 points On December 31, 2013, the balance in Accounts Receivable was $680,000 and net credit sales amounted to $3,800,000 during 2013. An aging analysis of the accounts receivable indicated that $40,000 in accounts are expected to be uncollectible. Past experience has shown that about 1% of net credit sales eventually are uncollectible. Instructions Prepare the adjusting entries to record estimated bad debts expense using the receivables basis under each of the following independent assumptions: (a) Allowance for Doubtful Accounts has a credit balance of $3,200 before adjustment. 31-Dec Bad Debt Expense allowance for Bad Debt (b) Allowance for Doubtful Accounts has a debit balance of $730 before adjustment.

Explanation / Answer

Bad debt expense(40000-3200)

Account titles debit credit a.

Bad debt expense(40000-3200)

36800 Allowance for doubtful account 36800 b. Bad debt expense(40000+730) 40730 Allowance for doubtful account 40730

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