Cornerstone Exercise 5-26 (Algorithmic) Write-Off of Uncollectible Accounts The

Question

Cornerstone Exercise 5-26 (Algorithmic) Write-Off of Uncollectible Accounts The Rock has credit sales of $520,000 during 2019 and estimates at the end of 2019 that 296 of these credit sales will eventually default. Also, during 2019 a customer defaults on a $1,700 balance related to goods purchased in 2019. Required: 1. Prepare the journal entry to record the defaulted balance. Record write-off of defaulted account 2. Prepare the adjusting entry to record the bad debt expense for 2019 Record adjusting entry for bad debt expense estimate

Explanation / Answer

1 Allowance for doubtful accounts 1700            Accounts Receivable 1700 2 Bad debts expense 10400 =520000*2%        Allowance for doubtful accounts 10400

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