Question

Wildhorse Co. uses the percentage-of-receivables basis to record bad debt expense and concludes that 3% of accounts receivable will become uncollectible. Accounts receivable are $382,600 at the end of the year, and the allowance for doubtful accounts has a credit balance of $2,613. (a) Prepare the adjusting journal entry to record bad debt expense for the year. (b) If the allowance for doubtful accounts had a debit balance of $903 instead of a credit balance of $2,613, prepare the adjusting journal entry for bad debt expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (a) Enter an account title Enter a debit amount Enter a credit amount Enter an account title Enter a debit amount Enter a credit amount (b) Enter an account title Enter a debit amount Enter a credit amount Enter an account title Enter a debit amount Enter a credit amount

Answer 1

a)	Bad Debt Expense	8865
	Allowance for Doubtful Accounts		8865
b)	Bad Debt Expense	12381
	Allowance for Doubtful Accounts		12381

* bad debt expense = (382600 x 3%) - 2613 = 8865

*bad debt expense = (382600 x 3%) + 903 = 12381