Question

Credit sales 172,000 collections on accounts receivable during the year 170,000 cash sales 818,000 unadjusted debit balance in allowance for doubtful accounts 40 sales returns and allowances for credit sales 2,000 accounts receivable, beginning 14,000.If expected bad debts are estimated to be 1 1/2% of ending accounts receivable, the adjusting entry to recognize bad debts will include a debit to bad debt expense for a) $170 b)$190 c) $250 d) $210

Answer 1

$250 ( C )

Step-by-step explanation:

using the given data below is the entry

The adjusting entry to recognize bad debts will include a debit to bad debt expense for

particulars amount

Beginning accounts receivable 14000

+ Credit sales made during the year 172000

(-) collections from debtors (170000)

(-) expected salary return & allowances for credit sales (2000)

Ending accounts receivable 14000

Percentage of bad debt 1.5%

Total bad debts balance required ( 14000*1.5%) 210

+ Already debit balance in allowance for doubtful account 40

Total debit to be made in bad debts 250

Total debts = total bad debts balance required + already debit balance in all

= 210 + 40 = $250