Question

Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment), and bad debt expense is estimated at 4% of credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is______.

a.cannot be determined
b.$34,500
c.$32,000
d.$29,500

Answer 1

Answer: b.$34,500

Explanation:

All expenses have a debit balance, the current estimated bad debt is $32,000(4%*800000). This will be added to the debit balance in the books of account, give a total balance of $34,500