Question

Craigmont uses the allowance method to account for uncollectible accounts. Its year-end unadjusted trial balance shows Accounts Receivable of $126,500, allowance for doubtful accounts of $885 (credit) and sales of $1,035,000. If uncollectible accounts are estimated to be 0.6% of sales, what is the amount of the bad debts expense adjusting entry?

Answer 1

Answer: $62,100

Explanation: The amount of the bad debts expense adjusting entry is $62,100 because you have to take your sales: $1,035,000 x 0.6% : of sales = $62,100