The Adjusting Entry will be:
Debit: Bad Debt Expense | $18,840
Credit: Allowance for Doubtful Accounts | $18,840
The total estimated uncollectible amount is $22,440.However, the unadjusted balance in the Allowance for Doubtful Accounts already has a $3,600 credit balance.
Therefore, the net bad debt expense to be recorded is $22,440 - $3,600 = $18,840. This adjusting entry increases the bad debt expense in the current period's income statement and decreases the allowance for doubtful accounts to reflect the updated estimate.
Accounts receivable $ 570,000 $ 396,000 $ 90,000 $ 36,000 $ 18,000 $ 30,000
Percent uncollectible 1% 2% 5% 7% 10%
Complete the table below to calculate the estimated balance of Allowance for Doubtful Accounts using aging of accounts receivable.
Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $3,600 credit.
What is the adjusting entry?