Homework Answers
A. Bad debts = 5% of sales
= $450,000 * 5%
= $22,500
Journal entry
| Bad debts | $22,500 | |
| Allowance for doubtful accounts | $22,500 |
B. Ending balance in the Allowance for doubtful accounts = $89,000 * 4.5% = $4,005
Bad debts = Ending balance in the Allowance for doubtful accounts - Beginning balance in the Allowance for doubtful accounts
= $4,005 - $3,000
= $1,005
| Bad debts | $1,005 | |
| Allowance for doubtful accounts | $1,005 |
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