At December 31, a company has the following balances:
Accounts Receivable | 35,000 | Credit Sales | 60,000 |
Allowance for Doubtful Accounts | 500 (credit) | Cash | 5,400 |
The company uses the balance sheet method to estimate bad debt. Management determined the estimate to be 3%. Under these circumstance, record the year-end adjusting entry for bad debt expense.
3. The Effect of Uncollectible Accounts Start Topic 8Journal Entry 1 | |||||
---|---|---|---|---|---|
Bad Debt Expense | 550 | ||||
Allowance for Doubtful Accounts | 550 |
Click Here to View All Topic 7 Problems at Once | View | ||
1 | The Effect of Bad Debt Expense | Easy | |
2 | Calculating Bad Debts | Moderate | |
3 | The Effect of Uncollectible Accounts | Moderate | |
4 |
Using the Balance Sheet Method
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Hard |
1 | A/R and Bad Debts Introduction | 7:09 | |
2 | Direct Method | 4:15 | |
3 | The Allowance Method | 8:56 | |
4 | Income Statement vs Balance Sheet Methods | 13:14 | |
5 | Net Credit Sales | 5:20 | |
6 | Write Offs and Reinstatements | 8:26 |
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