Respuesta :
Assuming that the provision for doubtful accounts has been recorded, the year-end adjusting statement to record bad debts expenditure
Define the term doubtful accounts?
- A receivable that may eventually turn into a bad debt is known as a questionable account or doubtful debt.
- Establishing a provision for doubtful accounts is crucial for your income statement if consumers make purchases on credit.
1. The $415 will be subtracted since allowance for dubious debts has a credit balance.
Bad debt expenses = (Outstanding accounts receivable × Uncollectible rate) - Credit balance
Bad debt expenses = (2% × $55,000) - $415
Bad debt expenses = $1,100 - $415
Bad debt expenses = $685
The journal entries are -
Date Particulars Debit Credit
Bad debt expense A/c $685
Allowance (Doubtful Accounts) $685
As Bad debt expenses are the, bad debt expense plotted.
2. There is a debit balance in the allowance for dubious debts, thus $291 will be added.
Bad debt expenses = (Outstanding accounts receivable × Uncollectible rate) + Debit balance
Bad debt expenses = (2% × $55,000) + $291
Bad debt expenses = $1,100 - (-$291)
Bad debt expenses = $1,391
The journal entries are -
Date Particulars Debit Credit
Bad debt expense A/c $1,391
Allowance (Doubtful Accounts) $1,391
As Bad debt expenses are the, bad debt expense plotted.
Thus, assuming that the provision for doubtful accounts has been recorded, the year-end adjusting statement to record bad debts expenditure.
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