Question

Brief Exercise 8-6 Whispering Winds Corp. uses the percentage-of-receivables basis to record bad debt expense. It estimates that 1% of accounts receivable will become uncollectible. Accounts receivable are $450,000 at the end of the year, and the allowance for doubtful accounts has a credit balance of $2,140. Prepare the adjusting journal entry to record bad debt expense for the year. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Bad Debt Expense Allowance for Doubtful Accounts SHOW LIST OF ACCOUNTS If the allowance for doubtful accounts had a debit balance of $920 instead of a credit balance of $2,140, determine the amount to be reported for bad debt expense. Bad Debt Expe SHOW LIST OF ACCOUNTS

Answer 1

Solution: Account title Bad debts expense Allownce for doubtful accounts (450000*1%-2140) Debit Credit 2360 2360 5420 Bad debts expense (450000*1%+920)