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A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year: (3 points)
Debit Credit
Cash sales……………………………………………….. $188,000
Credit sales……………………………………………… 275,000
Accounts receivable…………………………………….. $76,000
Allowance for doubtful accounts……………………….. 1,000
Prepare the adjusting entry to estimate bad debts assuming an aging analysis estimates that 8% of the outstanding accounts receivable will be uncollectible.

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Tundexi

Answer:

Particulars                                   Amount

Provision for uncollectible         $6,080 ($76000*8%)

Less: Provision already made   $1,000

Provision to be made                $5,080

Date       Particulars                                                      Debit     Credit

31-Dec    Bad Debts                                                    $5,080

                    To Allowance for Doubtful Accounts                    $5,080

               (Being the adjusting entry to estimate bad debts)

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