Question

Blossom, Inc. had net sales in 2017 of $1,504,300. At December 31, 2017, before adjusting entries, the balances in selected accounts were Accounts Receivable $263,900 debit, and Allowance for Doubtful Accounts $3,070 credit. If Blossom estimates that 7% of its receivables will prove to be uncollectible.Prepare the December 31, 2017, journal entry to record bad debt expense.

Answer 1

Step-by-step explanation:

Data given in the question

Net sales = $1,504,300

Account receivable = $263,900

Credit balance Allowance for doubtful debts = $3,070

So, the journal entry to record the bad debt expense is shown below:

Bad debt expense A/c Dr $15,403

To Allowance for doubtful debts $15,403

(Being bad debt expense is recorded)

The computation of the bad debt expense is shown below:

= (Accounts receivable × estimated percentage given ) - (credit balance of Allowance for Doubtful Accounts)

= ($263,900 × 7%) - ($3,070)

= $18,473 - $3,070

= $15,403