Assume the following unadjusted account balances at the end of the accounting pe

Question

Assume the following unadjusted account balances at the end of the accounting period for Brooks Company: Accounts Receivable, $30.000 Allowances for Doubtful Accounts, $800 (debit balance;: Net sales, $240,000 If Brooks Company's past experience indicates credit losses of 2% of net sales, the adjusting entry to estimate uncollectible accounts is Select one: Bad Debts Expense 4,800 Allowance for Doubtful Accounts 4.800 Bad Debts Expense 4,700 Accounts Receivable 4.700 OC Bad Debts Expense 4.000 41000 Allowance for Doubtful Accounts D. Bad Debts Expense 600 Allowanice for Doubtful Accounts

Explanation / Answer

1 Bad debts expense 4800 =240000*2%          Allowance for Doubtful accounts 4800 2 Bad debts expense 11200          Allowance for Doubtful accounts 11200 3 Accounts receivable ending balance=140000+800000-810000-4000= $126000 Allowance for Doubtful accounts ending balance=5000-4000=$1000 Bad debts expense = (126000*5%)-1000= $5300

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