Question

Assume the following unadjusted account balances at the end of the accounting period for Chocolate Brownie Palace: Accounts Receivable, $90,000; Allowance for Doubtful Accounts, $1,000 (credit balance); and Sales revenue $600,000. If Chocolate Brownie Palace ages the accounts and determines that $5,000 of receivables may be uncollectible, the adjusting entry should be:

Answer 1

Bad debt expenses = $4,000

Step-by-step explanation:

Debit Credit

Bad debt expense $4,000

Allowances for doubtful accounts $4,000

Workings

= $5,000 of receivables - $1,000 of Allowance for doubtful account

= $4,000