Respuesta :
Answer:
Adjusting entry amount shall be $ 5,100
Explanation:
Computation of adjustment to Allowance for Doubtful accounts
Accounts Receivable balance $ 170,000
Percentage of allowance for Doubtful accounts 5 %
Allowance for Doubtful accounts - $ 170,000 * 5% $ 8,500
Existing balance of Allowance for Doubtful accounts $ 3,400
Adjusting entry to Allowance for Doubtful accounts $ 5,100
Answer:
Debit Bad debt expense $5,100
Credit Allowance for doubtful debit $5,100
Explanation:
When a company makes sales on account, debit accounts receivable and credit sales. Based on assessment, some or all of the receivables may be uncollectible.
To account for this, debit bad debit expense and credit allowance for doubtful debt. Should the debt become uncollectible (i.e go bad), debit allowance for doubtful debt and credit accounts receivable.
Where a debit that had previously been determined to have gone bad gets settled, debit cash and credit bad debts expense.
If the company estimates that 5% of accounts receivable will be uncollectible, then amount estimated
= 5% × $170,000
= $8,500
Given that the Allowance for Doubtful Accounts has a credit balance of $3400, additional amount required
= $8,500 - $3,400
= $5,100
