Question

Exercise 7-07

Coronado Company reports the following financial information before adjustments.

		Dr.			Cr.
Accounts Receivable		$138,100
Allowance for Doubtful Accounts					$2,970
Sales Revenue (all on credit)					845,000
Sales Returns and Allowances		53,310

Prepare the journal entry to record bad debt expense assuming Coronado Company estimates bad debts at (a) 4% of accounts receivable and (b) 4% of accounts receivable but Allowance for Doubtful Accounts had a $1,410 debit balance. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

Credit Date (a) Account title Bad debt expense (4%x138,100)-2,970 Allowance for doubtful accounts Debit 2,554 2,554 (b) 6,934 Bad debt expense (4%x138,100)+1,410 Allowance for doubtful accounts 6,934