Question

Assume another company estimates bad debt to be 5.2% of A/R. If A/R = 45,000 and...

Assume another company estimates bad debt to be 5.2% of A/R. If A/R = 45,000 and the allowance for bad debt has a debit balance of 1,340, what is Net A/R?

Using information from the previous question, what would be the journal entry to recognize bad debts expense? Indicate debits with "dr." and credits with "cr."

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Answer #1
Accounts receivable balance 45000
Multiply: Estimated Uncollectible 5.20%
Required balance of allowance 2340
Add: Debit balance of Allowance 1340
Bad debts expense 3680
Net Accounts receivable
Accounts receivable 45000
Less: Allowance for bad debts 2340
Net Accounts receivable 42660
Journal entry
S.no. Accounts title and explanations Debit $ Credit $
a. Bad debts expense 3,680
     Allowance for bad debts 3680
(for bad debts expense recognized)
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