Assume that Buffalo Company has recently fallen into financial difficulties. By

Question

Assume that Buffalo Company has recently fallen into financial difficulties. By reviewing all available evidence on December 31, 2017, one of Buffalo’s creditors, the National American Bank, determined that Buffalo would pay back only 65% of the principal at maturity. As a result, the bank decided that the loan was impaired. The loss is estimated to be $253,200.

What entry should National American Bank make to record this loss? (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

Date

Account Titles and Explanation

Debit

Credit

Explanation / Answer

Date Account Titles and Explanation Debit Credit Dec. 31, 2017 Bad Debt Expense $253,200 Allowance for Doubtful Accounts $253,200

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