Question

At the end of the current year, the accounts receivable account has a debit balance of $100,000 and Sales for the year totaled $1,500,000. The Allowance for Doubtful Accounts has a DEBIT balance of $2,000 prior to adjustment. What is the amount of the adjusting entry if an aging of the receivables indicates estimated doubtful accounts of $35,000?

Answer 1

bad debt expense 37,000 debit

allowance of doubtful account 37,000 credit

-- year-end adjustment for allowance of doubtful accounts--

Step-by-step explanation:

the aging method determinates the year-end value for the allowance for doubtful account

Thus, we need to solve for the adjustment (bad debt expenses)

year end balance 35,000 credit

beginning balance 2,000 debit

total adjustment 37,000

we have to recognize this amount of bad debt expense and credit the allowance for that amount