Assume that your company now needs to estimate bad debts expense. Please use ONE of three allowance methods to estimate...
Assume that your company now needs to estimate bad debts expense. Please use ONE of three allowance methods to estimate uncollectible. Please come up with your own scenarios and write down the journal that you recorded.
For example: On December 31, 2019, my business "Prof. Shu Catering LLC." has an unadjusted Accounts Receivable balance of $8,000, and 4% of accounts receivable is estimated to be uncollectible. Here I would like to use "percent-of-receivable" method. The Allowance for Bad Debts account has a credit balance of $60, so the adjustment is $260.
Below is the journal.
| Date | Accounts and Explanation | Debit | Credit |
| Dec. 31 | Bad Debts Expense | 260 | |
| Allowance for Bad Debts | 260 | ||
| Record bad debts expense for the period. |
Homework Answers
Journal entry
| Date | Accounts and Explanation | Debit | Credit |
| Dec. 31 | Bad Debts Expense (8000*4%-60) | 260 | |
| Allowance for Bad Debts | 260 | ||
| Record bad debts expense for the period. |
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