Record the adjusting entry for Bad Debt Expense under the following independent scenarios (assume net sales of $300,000 for the year and A/R balance of $50,000). Please also specify the balance in the allowance account after adjustment: The allowance account before adjustment has a credit balance of $3,000. Bad debt expense is estimated at 2% of net sales. The allowance account before adjustment has a credit balance of $3,000. An aging analysis of A/R indicates uncollectible accounts of $7,500. The allowance account before adjustment has a debit balance of $4,000. Bad debt expense is estimated at 3% of net sales. The allowance account before adjustment has a debit balance of $4,000. An aging analysis of A/R indicates uncollectible accounts of $7,500.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Record the
- The allowance account before adjustment has a credit balance of $3,000. Bad debt expense is estimated at 2% of net sales.
- The allowance account before adjustment has a credit balance of $3,000. An aging analysis of A/R indicates uncollectible accounts of $7,500.
- The allowance account before adjustment has a debit balance of $4,000. Bad debt expense is estimated at 3% of net sales.
- The allowance account before adjustment has a debit balance of $4,000. An aging analysis of A/R indicates uncollectible accounts of $7,500.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
