The unadjusted trial balance of ABC Company reports the following balances at the end of the year: Dr Cr Accounts receivable $50,000 Allowance for doubtful accounts $ 2,000 Sales (all on credit) 100,000 Sales returns and allowances 25,000 Sales discounts 5,000 Instructions: Prepare the journal entry to record bad debt expense assuming that bad receivables are estimated to be 5% of ending accounts receivable.
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.
The unadjusted
Dr Cr
Allowance for doubtful accounts $ 2,000
Sales (all on credit) 100,000
Sales returns and allowances 25,000
Sales discounts 5,000
Instructions:
Prepare the
receivable.
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