Question

The following selected amounts are reported on the year-end unadjusted trial balance report for a company that uses the percent of sales method to determine its bad debts expense. Accounts receivable $ 430,000 Debit Allowance for Doubtful Accounts 1,400 Debit Net Sales 2,250,000 Credit All sales are made on credit. Based on past experience, the company estimates 1.0% of credit sales to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense? Multiple Choice Debit Bad Debts Expense $5,700; credit Allowance for Doubtful Accounts $5,700. Debit Bad Debts Expense $22,500; credit Allowance for Doubtful Accounts $22,500. Debit Bad Debts Expense $23,900; credit Allowance for Doubtful Accounts $23,900. Debit Bad Debts Expense $4,300; credit Allowance for Doubtful Accounts $4,300. Debit Bad Debts Expense $21,100; credit Allowance for Doubtful Accounts $21,100.

Answer 1

The correct answer is " Debit Bad Debts Expense $23,900; credit Allowance for Doubtful Accounts $23,900.?"

Date	Account Description	Debit	Credit
	Bad Debts Expense	$ 23,900
	Allowance for Doubtful Accounts		$ 23,900

Calculation

Credit sales	$    2,250,000
Bad-Debt(2250000*1%)	$          22,500
Debit Allowance for Doubtfull Debts	$            1,400
Bad Debt Expenses (22500+1400)	$          23,900

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