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Craigmont uses the allowance method to account for uncollectible accounts. Its year-end unadjusted trial balance shows Accounts Receivable of $104,500, allowance for doubtful accounts of $665 (credit) and sales of $925,000. If uncollectible accounts are estimated to be 0.5% of sales, what is the amount of the bad debts expense adjusting entry?

Respuesta :

tanseershar

Answer:

Workings are shown below

Explanation:

Sales=$925,000*.5%=$4,625

Allowance for doubtful accounts for the year=$4,625-$665=$3,960

Bad Debt Expense    Dr.$3,960

Allowance for Doubtful Accounts Cr.$3,960

TomShelby

Answer:

bad debt expense 4,625 debit

   allowance for doubtful accounts   4,625 credit

Explanation:

$925,000 sales x 0.5% = $4,625

As the bad debt is calcualte as a percent of sales the amount will be compute entirely as we don't have to compare against the current balance the sales generate 4,625 dollars of bad debt additional to the beginning balnce of the allownace which, represnet sales of other periods which weren't declare uncollectible for the moment but may in the future

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