Homework SourseA company had the following items and amounts in its unadjus
A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year:
a. Prepare the adjusting journal entry to estimate bad debts expense analysis estimates that 8% of the outstanding accounts receivable (Hint: What should the total be and how do you get there?)
b. Show all the details, amounts, and totals for the Allowance for Doubtful Accounts and the Bad Debt Expense ‘T’ accounts.
Solution
Solution a:
Outstanding accounts receivables = $76,000
Estimated uncollectibles = $76,000 * 8% = $6,080
Current balance of allowanc for doubtful account = $1,000 debit
Bad debts expense for the year = $6,080 + $1,000 = $7,080
Solution b:
| Journal Entries | ||
| Particulars | Debit | Credit |
| Bad debts expense Dr | $7,080.00 | |
| To Allowance for doubtful accounts | $7,080.00 | |
| (To record bad debts expense) |
