Question

Sandhill Company reports the following financial information before adjustments. Dr. Cr. Accounts Receivable $132,500 Allowance for Doubtful Accounts $3,970 Sales Revenue (all on credit) 838,100 Sales Returns and Allowances 50,780 Prepare the journal entry to record bad debt expense assuming Sandhill Company estimates bad debts at (a) 5% of accounts receivable and (b) 5% of accounts receivable but Allowance for Doubtful Accounts had a $1,630 debit balance. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

S/n Accounts title Debit Credit

a. Bad Debt expenses $2,655

Allowance for Doubtful debts $2,655

((132,500*5%)-3,970)

(Being bad debt expense recorded)

b. Bad Debt expenses $8,255

Allowance for Doubtful debts $8,255

{(132,500*5%)+1,630]

(Being bad debt expense recorded)