At each calendar year-end, Mazie Supply Co. uses the percent of accounts receiva

Question

At each calendar year-end, Mazie Supply Co. uses the percent of accounts receivable method to estimate bad debts. On December 31, 2016, it has outstanding accounts receivable of $92,000, and it estimates that 3% will be uncollectible. Prepare the adjusting entry to record bad debts expense for year 2016 under the assumption that the Allowance for Doubtful Accounts has: (a) a $1,564 credit balance before the adjustment. (b) a $460 debit balance before the adjustment. View transaction list Journal entry worksheet Record the adjusting entry to record bad debts expense for year 2016 under the assumption that the Allowance for Doubtful Accounts has a $1,564 credit balance before the adjustment. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal

Explanation / Answer

Transaction General Journal Debit Credit (a) Bad debts expense 1196 =(92000*3%)-1564 Allowance for doubtful accounts 1196 (b) Bad debts expense 3220 =(92000*3%)+460 Allowance for doubtful accounts 3220

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