Question

Bramble Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $598000 and credit sales are $2620000. Management estimates that 5% is the sales percentage to use. What adjusting entry will Bramble Company make to record the bad debts expense?

Answer 1

Bad debt expense Dr ($2,620,000 × 5%) $131,000

To Allowance for doubtful debts $131,000

(Being bad debt expense is recorded)

Step-by-step explanation:

The adjusting journal entry is shown below:

Bad debt expense Dr ($2,620,000 × 5%) $131,000

To Allowance for doubtful debts $131,000

(Being bad debt expense is recorded)

Here bad debt expense is debited as it increased the expense and credited the allowance for doubtful debt as it decreased the assets

Also assets and expenses has normal debit balance