expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts: Accounts Receivable 400,000 debit balance Allowance for Doubtful accounts 500 credit balance Net Sales 800,000 credit balance Bad Debt Expense 2,000 debit balance All sales are made on credit. Based on past experience, the company estimates 0.7% 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 AND what would be the balance of the Allowance for Doubtful accounts after the adjustment is made?
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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