At December 31, 2016, the trial balance of Garvey Company contained the following amount before adjustment.
Accounts Receivable $ 500,000
Allowance for Doubtful Accounts $ 4,800 Sales Revenue 2,400,000
(a) Prepare the adjusting entry at December 31, 2016, for bad debts expense assuming that the aging schedule indicates that $26,000 of accounts receivables will be uncollectible..
(b) Repeat part (a), assuming that instead of a credit balance there is a $4,800 debit balance in the Allowance for Doubtful Accounts.
(c) During the next month, January 2017, a $5,000 account receivable is written off as uncollectible. Prepare the journal entry to record the write-off.
|a]||Bad debts expense [26000-4800]||$ 21,200|
|Allowance for doubtful accounts||$ 21,200|
|b]||Bad debts expense [26000+4800]||$ 30,800|
|Allowance for doubtful accounts||$ 30,800|
|c]||Allowance for doubtful accounts||$ 5,000|
|Accounts receivable||$ 5,000|
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