Question - Providing for Doubtful Accounts
At the end of the current year, the accounts receivable account has a debit balance of $1,021,000 and net sales for the year total $11,580,000.
At the end of the current year, the accounts receivable account has a debit balance of $1,021,000 and net sales for the year total $11,580,000.
a. The allowance account before adjustment has a credit balance of $13,800. Bad debt expense is estimated at 1/2 of 1% of net sales.
b. The allowance account before adjustment has a credit balance of $13,800. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $44,200.
c. The allowance account before adjustment has a debit balance of $7,200. Bad debt expense is estimated at 3/4 of 1% of net sales.
d. The allowance account before adjustment has a debit balance of $7,200. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $59,800.
Required - Determine the amount of the adjusting entry to provide for doubtful accounts under each of the assumptions (a through d) listed above.