(39) A company's controller estimated bad debt expense using the percentage of accounts receivable method. Total sales for the year were $500,000. The ending balance in accounts receivable was $100,000. An examination of the outstanding accounts at the end of the year indicates that approximately 8% of these accounts will ultimately prove to be uncollectible. Before any adjustment, the balance in the allowance for bad debts is $1,100 (credit). Total accounts written off as uncollectible during the year were $7,700. Which debit or credit is included in the adjusting entry to record bad debt expense for the year? O Debit allowance for bad debts for $7,700. O Credit allowance for bad debts for $6,900. O Debit allowance for bad debts for $9,100. O Credit allowance for bad debts for $8,000.

Cornerstones of Financial Accounting
4th Edition
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Chapter5: Sales And Receivables
Section: Chapter Questions
Problem 65E: Average Uncollectible Account Losses and Bad Debt Expense The accountant for Porile Company prepared...
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(39) A company's controller estimated bad debt expense using the percentage of
accounts receivable method. Total sales for the year were $500,000. The ending
balance in accounts receivable was $100,000. An examination of the
outstanding accounts at the end of the year indicates that approximately 8% of
these accounts will ultimately prove to be uncollectible. Before any adjustment,
the balance in the allowance for bad debts is $1,100 (credit). Total accounts
written off as uncollectible during the year were $7,700.
Which debit or credit is included in the adjusting entry to record bad debt
expense for the year?
O Debit allowance for bad debts for $7,700.
O Credit allowance for bad debts for $6,900.
O Debit allowance for bad debts for $9,100.
O Credit allowance for bad debts for $8,000.
Transcribed Image Text:(39) A company's controller estimated bad debt expense using the percentage of accounts receivable method. Total sales for the year were $500,000. The ending balance in accounts receivable was $100,000. An examination of the outstanding accounts at the end of the year indicates that approximately 8% of these accounts will ultimately prove to be uncollectible. Before any adjustment, the balance in the allowance for bad debts is $1,100 (credit). Total accounts written off as uncollectible during the year were $7,700. Which debit or credit is included in the adjusting entry to record bad debt expense for the year? O Debit allowance for bad debts for $7,700. O Credit allowance for bad debts for $6,900. O Debit allowance for bad debts for $9,100. O Credit allowance for bad debts for $8,000.
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