Question

19)

Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $390,000 and credit sales are $1,300,000. An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment? Bad Debt Expense 17,000 Allowance for Doubtful Accounts 17,000 Bad Debt Expense 19,500 Allowance for Doubtful Accounts 19,500 Bad Debt Expense 22,000 Allowance for Doubtful Accounts 22,000 Bad Debt Expense 65,000 Allowance for Doubtful Accounts 65,000

20)

Answer 1

19)

Bad debts expense = ( Accounts receivables * % Uncollectible ) - Credit balance of allowance for doubtful accounts = ( 390000 * 5% ) - 2500

17000

Journal entry :
	Dr.	Cr.
Bad debts expense	17000
Allowance for doubtful accounts		17000

20)

Entry for writing off the uncollectible accounts receivable using allowance method will be as follows
	Dr.	Cr.
Allowance for doubtful accounts	100
Accounts receivables		100

So, the answer is : debit Allowance for doubtful accounts and credit Accounts receivables.