The following selected amounts are reported on the year-end unadjusted trial bal

Question

The following selected amounts are reported on the year-end unadjusted trial balance report for a company that uses the percent of sales method to determine its bad debts expense. Accounts receivable Allowance for Doubtful Accounts Net Sales $ 435,000 Debit 1,250 Debit 2,100,000 Credit All sales are made on credit. Based on past experience, the company estimates 1% of credit sales to be uncollectible, what adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Explanation / Answer

Answer is Debit Bad Debt Expense $22250, credit allowance for doubtful accounts $22250

Particulars Amt Bad Debt (2100000 x 1%) 21000 Debit balance in alowance 1250 Bad Debt Expense 22250

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