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At the end of the current year, the accounts receivable account has a debit balance of $100,000 and Sales for the year totaled $1,500,000. The Allowance for Doubtful Accounts has a DEBIT balance of $2,000 prior to adjustment. What is the amount of the adjusting entry if an aging of the receivables indicates estimated doubtful accounts of $35,000?

Respuesta :

TomShelby

Answer:

bad debt expense                     37,000   debit

 allowance of doubtful account             37,000 credit

-- year-end adjustment for allowance of doubtful accounts--

Explanation:

the aging method determinates the year-end value for the allowance for doubtful account

Thus, we need to solve for the adjustment (bad debt expenses)

year end balance      35,000 credit

beginning balance     2,000 debit

total adjustment       37,000

we have to recognize this amount of bad debt expense and credit the allowance for that amount

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