A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts:
Accounts receivable |
$ |
375,000 |
debit |
Allowance for uncollectible accounts |
500 |
debit |
|
Net Sales |
800,000 |
credit |
All sales are made on credit. Based on past experience, the company estimates 0.6% of net credit sales to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?
Debit Bad debts Expense $2130; Credit Allowance for Doubtful Accounts $2130
The entry to record its estimated bad debt expense will be
Bad debts expense | 4800 | |
Allowance for Doubtful Accounts | 4800 |
(800,000*0.6%)
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A company uses the percent of sales method to determine its bad debts expense. At the...
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