Question

Cheyenne Corp. uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $170000 and credit sales are $1710000. Management estimates that 5% of accounts receivable will be uncollectible. What adjusting entry will Cheyenne Corp. make if the Allowance for Doubtful Accounts has a credit balance of $3400 before adjustment? Bad Debt Expense 5100 Allowance for Doubtful Accounts 5100 Bad Debt Expense 5100 Accounts Receivable 5100 34200 Bad Debt Expense 34200 Accounts Receivable Bad Debt Expense 34200 Allowance for Doubtful Accounts 34200

Answer 1

Ans Bad Debt Expense 5100

Allowance for Doubful Accounts 5100

Allowance for Doubtful Accounts should be 5% of accounts receivable = 5% * 170000 = $ 8500

Less: Opening Balance = $ 3400

TO be transferrred to Allowance for Doubtful Accounts = $ 5100