Question

Vaughn, Inc. had net sales in 2020 of $1,410,300. At December 31, 2020, before adjusting entries, the balances in selected accounts were Accounts Receivable $348,200 debit, and Allowance for Doubtful Accounts $2,940 credit. If Vaughn estimates that 10% of its receivables will prove to be uncollectible. Prepare the December 31, 2020, journal entry to record bad debt expense.

Answer 1

Date Account Title Debit Credit

Dec. 31 2020 Bad Debt expense $31,880

Allowance for Doubtful Accounts $31,880

Step-by-step explanation:

Bad debt expense for the period:

= (Estimate of uncollectible receivables) - Allowance for Doubtful accounts credit balance

= (348,200 * 10%) - 2,940

= $31,880