At year-end Shifty Ltd had a balance of Accounts Receivable of $90 000 and an Allowance...

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At year-end Shifty Ltd had a balance of Accounts Receivable of $90 000 and an Allowance for Doubtful Debts of $4000. It was d

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Answer 1

Answer #1

Allowance for doubtful debts balance after written off the debt of Wriggler = 4,000 - 2,500 = $1,500

Allowance for doubtful debts balance should be = (90,000 - 2,500) * 5%

= $4,375

Additional amount of allowance to be provided for = 4,375 - 1,500 = $2,875

Journal entry will be debit to Bad debts expense for $2,875 and credit to allowance for doubtful debts for $2,875.

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Answer 2

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At year-end Shifty Ltd had a balance of Accounts Receivable of $90 000 and an Allowance...

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