Question

Blue, Inc. had net sales in 2020 of $1,412,500. At December 31, 2020, before adjusting entries, the balances in selected accounts were Accounts Receivable $393,600 debit, and Allowance for Doubtful Accounts $1,922 debit. Assume that 10% of accounts receivable will prove to be uncollectible. Prepare the entry to record bad debt expense.

Answer 1

Step-by-step explanation:

The journal entry to record the bad debt expense is shown below:

Bad debt expense A/c Dr $41,282

To Allowance for doubtful debts $41,282

(Being bad debt expense is recorded)

The computation of the bad debt expense is shown below:

= (Accounts receivable × estimated percentage given ) + (debit balance of Allowance for Doubtful Accounts)

= ($393,600 × 10%) + $1,922

= $39,360 + $1,922

= $41,282