Question

C. Company reports the following financial information before adjustments.

	Dr.			Cr.
Accounts Receivable		$165,800
Allowance for Doubtful Accounts					$3,730
Sales Revenue (all on credit)					840,900
Sales Returns and Allowances		52,650

Prepare the journal entry to record bad debt expense assuming C. Company estimates bad debts at (a) 5% of accounts receivable and (b) 5% of accounts receivable but Allowance for Doubtful Accounts had a $1,380 debit balance.

Answer 1

Date	Particulars	Debit($)	Credit($)
a	Bad Debt Expense	8290
	Allowance for Doubtful Accounts		8290
	Company estimates bad debts 5% of accounts receivable(165800*5%)

Date	Particulars	Debit($)	Credit($)
b	Bad Debt Expense	9670
	Allowance for Doubtful Accounts		9670
	Company estimates bad debts 5% of accounts receivable with Debit Balance(165800*5%)+1380

Accounts Receivable	165800
Less: Allowance for Doubtful Accounts	-9670
Accounts Receivable	$156130