Answered

Connect with knowledgeable experts and enthusiasts on IDNLearn.com. Join our knowledgeable community to find the answers you need for any topic or issue.

Splish Brothers Inc. uses the percentage-of-receivables basis to record bad debt expense and concludes that 3% of accounts receivable will become uncollectible. Accounts receivable are $402,700 at the end of the year, and the allowance for doubtful accounts has a credit balance of $2,897. (a) Prepare the adjusting journal entry to record bad debt expense for the year. (b) If the allowance for doubtful accounts had a debit balance of $989 instead of a credit balance of $2,897, prepare the adjusting journal entry for bad debt expense.

Sagot :

Abiolataiwo2015idn

Answer:

A. Dr Bad Debt Expense $9,184

Cr Allowance for Doubtful accounts $9,184

B. Dr Bad Debt Expense $13,070

Cr Allowance for Doubtful accounts $13,070

Explanation:

a.Preparation of the adjusting journal entry to record bad debt expense for the year.

Dr Bad Debt Expense $9,184

[($402,700 x 3%) - $ 2,897 ]

Cr Allowance for Doubtful accounts $9,184

(To record bad debt expense)

b. Preparation of the adjusting journal entry for bad debt expense

Dr Bad Debt Expense $13,070

[($402,700 x 3%) + $ 989]

Cr Allowance for Doubtful accounts $13,070

(To record bad debt expense)

Your engagement is important to us. Keep sharing your knowledge and experiences. Let's create a learning environment that is both enjoyable and beneficial. Thank you for choosing IDNLearn.com. We’re here to provide reliable answers, so please visit us again for more solutions.