Providing for Doubtful Accounts At the end of the current year, the accounts receivable account has a balance of $1,073,000 and sales for the year total $12,170,000. Determine the amount of the adjusting entry to provide for doubtful accounts under each of the following independent assumptions: a. The allowance account before adjustment has a negative balance of $(14,500). Bad debt expense is estimated at 1/4 of 1% of sales. 30,425 V b. The allowance account before adjustment has a negative balance of $(14,500). An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $46,400. 31,900✔ c. The allowance account before adjustment has a positive balance of $5,400. Bad debt expense is estimated at 3/4 of 1% of sales. 91,275 V d. The allowance account before adjustment has a positive balance of $5,400. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $44,800. 50,200
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.
Hi,
I am having a terrible time trying to understand when the balance in the allowance for doubtful account is involved in the final answer, and when it is not. Will you please explain why the answers are what they are in the attachment?
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