The unadjusted trial balance at year-end for a company that uses the percent of receivables method to determine its bad debts expense reports the following selected amounts:
Accounts Receivable $ 445,000 Debit
Allowance for Doubtful Accounts 1,350 Debit
Net Sales 2,200,000 Credit
All sales are made on credit. Based on past experience, the company estimates 2.5% of ending accounts receivable to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Question

The unadjusted trial balance at year-end for a company that uses the percent of receivables method to determine its bad debts expense reports the following selected amounts:

Accounts Receivable	$ 445,000	Debit
Allowance for Doubtful Accounts	1,350	Debit
Net Sales	2,200,000	Credit

All sales are made on credit. Based on past experience, the company estimates 2.5% of ending accounts receivable to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Answer

Debit Bad Debts Expense $9,775; credit Allowance for Doubtful Accounts $9,775.

Answer

Debit Bad Debts Expense $12,475; credit Allowance for Doubtful Accounts $12,475.

Answer

Debit Bad Debts Expense $5,500; credit Allowance for Doubtful Accounts $5,500.

Answer

Debit Bad Debts Expense $11,125; credit Allowance for Doubtful Accounts $11,125.

Answer

Debit Bad Debts Expense $15,500; credit Allowance for Doubtful Accounts $15,500.

Crowdly

The unadjusted trial balance at year-end for a company that uses the percent of ...

Want instant access to all verified answers on moodle.immaculata.edu?