Question

Cosmo Company reported credit sales of $345,000 for the calendar year in its first year of operations. At December 31, customers buying on credit owed $35,000 to the company. Based on the experience of similar businesses, management estimates that $3,500 of its accounts receivable will be uncollectible.

Prepare the necessary December 31 adjusting entry by selecting the account names and dollar amounts from the drop-down menus.

Answer 1

Debit Bad debt expense $3,500

Credit Allowance account $3,500

Being entries to account for estimated uncollectible receivables as at 31 December.

Step-by-step explanation:

credit sales = $345,000

trade receivables = $35,000

estimate of uncollectible receivables = $3,500

the necessary adjusting entries on 31 December

Debit Bad debt expense $3,500

Credit Allowance account $3,500

Being entries to account for estimated uncollectible receivables as at 31 December.