Question

Give the entry for estimated bad debts assuming that the allowance is to provide for doubtful accounts on the basis of (a) 4% of gross accounts receivable and (b) 5% of gross accounts receivable and Allowance for Doubtful Accounts has a $1,700 credit balance.

Answer 1

(a) estimated bad debts is $42,500

(b) estimated bad debts is $34,000

Step-by-step explanation:

(a) 1,700/4%= 42,500

(b) 1,700/5%=34,000