Question

A company used the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts: Accounts receivable $ 445,000 Debit Allowance for Doubtful Accounts 1,350 Debit Net Sales 2,200,000 Credit All sales are made on credit. Based on past experience, the company estimates 2.0% of its net sales to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense

Answer 1

Dr Bad Debt Expense $44,000

Cr Allowance for Doubtful Accounts $44,000

Step-by-step explanation:

Preparation of What adjusting Journal entry should the company make at the end of the current year to record its estimated bad debts expense

Based on the information given the adjusting Journal entry that the company should make at the end of the current year to record its estimated bad debts expense will be:

Dr Bad Debt Expense $44,000

Cr Allowance for Doubtful Accounts $44,000

(Net Sales 2,200,000*Estimated 2.0% of net sales)

(Being to record estimated bad debts expense)