Question

Craigmont uses the allowance method to account for uncollectible accounts. Its year-end unadjusted trial balance shows Accounts Receivable of $130,500, allowance for doubtful accounts of $925 (credit) and sales of $1,055,000. If uncollectible accounts are estimated to be 7% of accounts receivable, what is the amount of the bad debts expense adjusting entry

Answer 1

the amount of bad debt expense for the adjusting entry is $8,210

Step-by-step explanation:

The computation of the amount of bad debt expense for the adjusting entry is shown below:

= Unadjusted trial balance × estimated percentage - credit balance of allowance for doubtful accounts

= $130,500 × 7% - $925

= $9,135 - $925

= $8,210

Hence, the amount of bad debt expense for the adjusting entry is $8,210