Question

Concord, Inc. had net sales in 2025 of $1,428,800. At December 31, 2025, before adjusting entries, the balances in selected accounts were Accounts Receivable $392,000 debit, and Allowance for Doubtful Accounts $4,240 credit. If Concord estimates that 9% of its receivables will prove to be uncollectible. Prepare the December 31, 2025, journal entry to record bad debt expense.

Answer 1

To record the bad debt expense for Concord, Inc., calculate 9% of Accounts Receivable to find the desired balance in Allowance for Doubtful Accounts, then record the difference between this amount and the existing credit balance as an adjusting entry in Bad Debt Expense.

Step-by-step explanation:

The question asks for the December 31, 2025, journal entry to record bad debt expense for Concord, Inc. based on an estimate that 9% of its receivables will be uncollectible. Concord has Accounts Receivable of $392,000 and an existing Allowance for Doubtful Accounts with a $4,240 credit balance.

To determine the bad debt expense, we first calculate 9% of the Accounts Receivable: 0.09 * $392,000 = $35,280. This is the desired balance in the Allowance for Doubtful Accounts. Since there is already a $4,240 credit in the account, we need to determine the amount needed to adjust the balance to $35,280. The adjusting entry would be for the difference between the desired balance and the existing credit balance: $35,280 - $4,240 = $31,040.

The journal entry to record the bad debt expense is:

• Debit Bad Debt Expense $31,040
• Credit Allowance for Doubtful Accounts $31,040