Question - At the end of the current year, the accounts receivable account has a debit balance of $6,125,000 and net sales for the year total $66,800,000.
1. The allowance account before adjustment has a debit balance of $18,000. Bad debt expense is estimated at ¾ of 1% of net sales.
2. The allowance account before adjustment has a debit balance of $18,000. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $475,000.
3. The allowance account before adjustment has a credit balance of $10,000. Bad debt expense is estimated at ½ of 1% of net sales.
4. The allowance account before adjustment has a credit balance of $10,000. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $360,000.
Determine the amount of the adjusting entry to provide for doubtful accounts under each of the assumptions (a through d) listed above.