(Computing Bad Debts and Preparing Journal Entries) The trial balance before adj

Question

(Computing Bad Debts and Preparing Journal Entries) The trial balance before adjustment of Taylor Swift Inc. shows the following balances

                                                                                                Dr.                                                    Cr.

Accounts Receivable                                                               $90,000

Allowance for Doubtful Accounts                                               1,750

Sales Revenue (all on credit)                                                                                                           $680,000

Instructions

Give the entry for estimated bad debts assuming that the allowance is to provide for doubtful accounts on the basis of (a) 4% of gross accounts receivable and (b) 5% of gross accounts receivable and Allowance for Doubtful Accounts has a $1,700 credit balance.

Explanation / Answer

a) bad debt expense Dr 5350

Cr allowance for doubtful accounts 5350

90000 * 4% + 1750 = 5350

b)  

bad debt expense Dr 2800

Cr allowance for doubtful accounts 2800

90000 * 5% - 1700 =

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