The summer company ages its account receivable and determined the allowance acco

Question

The summer company ages its account receivable and determined the allowance account should have a balance of $8,300. Prepare the necessary adjusting entry assuming: a. The allowance account has a credit balance of $275.00 before adjustments. b. The allowance account has a debit balance of $275.00 before adjustments. The summer company ages its account receivable and determined the allowance account should have a balance of $8,300. Prepare the necessary adjusting entry assuming: a. The allowance account has a credit balance of $275.00 before adjustments. b. The allowance account has a debit balance of $275.00 before adjustments. The summer company ages its account receivable and determined the allowance account should have a balance of $8,300. Prepare the necessary adjusting entry assuming: a. The allowance account has a credit balance of $275.00 before adjustments. b. The allowance account has a debit balance of $275.00 before adjustments.

Explanation / Answer

a. Income Statement A/c Dr. 8,025

To Allowance for Doubtful Accounts A/c 8,025

Opening credit balance is 275. Closing credit balance should be 8,300. So the amount that has to be credited to Allowance account = 8300 -275 = 8,025.

b. Income Statement A/c Dr. 8,575

To Allowance for Doubtful Accounts A/c 8,575

Opening balance is Dr. 275. Closing balance should be credit 8,300. Amount to be credited = 275+ 8,300 = 8,575

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