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Blake Company had net credit sales of $900,000 during the year 20XX, and has an Accounts...

Blake Company had net credit sales of $900,000 during the year 20XX, and has an Accounts Receivable balance of $425,000 at December 31, 20XX, and an unadjusted credit balance of $11,000 in Allowance for Doubtful Accounts.  Blake estimates Bad Debt Expense as 1% of net credit sales.  

Record the journal entry for bad debt expense.

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Answer #1

Required provision for Allowance for Doubtful Accounts

Required provision for Allowance for Doubtful Accounts -= Net credit sales x Percentage of Bad debt provision

= $900,000 x 1.00%

= $9,000

Here, we’ve an unadjusted credit balance of $11,000 in Allowance for Doubtful Accounts which is $2,000 ($11,000 - $9,000) higher than the required provision for Allowance for Doubtful Accounts.

Therefore, no extra provision is required for the bad debt expense for the Year and hence no journal entry required.

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