Blackrock, Inc.'s "allowance for doubtful accounts" had a balance of $8,900 at the beginning of 2020. During the year, the company "wrote-off" $5,400 of accounts receivable as uncollectible and there were no bad debt recoveries. Based on an analysis of receivables outstanding at December 31, 2020, Blackrock's accountant determined that the "allowance for doubtful accounts" should have an ending balance of $9,400. What adjusting journal entry is required? Select one: Bad Debt Expense a. 5,900 Allowance for Doubtful Accounts 5,900 Bad Debt Expense b. 5,400 Allowance for Doubtful Accounts 5,400 Allowance for Doubtful Accounts C. 5,400 Bad Debt Expense 5,400 Allowance for Doubtful Accounts d. 5,900 Bad Debt Expense 5,900
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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