Question

At each calendar year-end, Mazie Supply Co uses the percent of accounts receivable method to estimate bad debts. On December 31, 2017, it has outstanding accounts receivable of $108,500, and it estimates that 4% will be uncollectible. Prepare the adjusting entry to record bad debts expense for year 2017 under the assumption that the Allowance for Doubtful Accounts has: (a) a $1,845 credit balance before the adjustment (b) a $543 debit balance before the adjustment. View transaction list View journal entry worksheet No Transaction General Journal 1 Debit Credit (a) Bad debts expense Allowance for doubtful accounts 2. (b) Bad debts expense Allowance for doubtful accounts

Answer 1

	Notes: 1
		CALCULATION OF BAD DEBTS EXPENSES ON THE BASIS OF ACCTOUNT RECEIVABLE
		When there is credit balance in allowance for doubtfull accounts of $ 1,845
		Account Receivable =	$               1,08,500
		Estimated of Uncollectable	4%
		Estimated of Uncollectable amount	$                     4,340
		Estimated for the Uncollectable Amounts	$                     4,340
		Less : Beginning Balance of allowance for dubtful Accts	$                     1,845
		Bad Debt Expenses of the yewar	$                     2,495
	Notes: 2
		CALCULATION OF BAD DEBTS EXPENSES ON THE BASIS OF ACCTOUNT RECEIVABLE
		When there is Debit balance in allowance for doubtfull accounts of $ 543
		Account Receivable =	$               1,08,500
		Estimated of Uncollectable	4%
		Estimated of Uncollectable amount	$                     4,340
		Estimated for the Uncollectable Amounts	$                     4,340
		Add : Beginning Balance of allowance for dubtful Accts	$                        543
		Bad Debt Expenses of the yewar	$                     4,883
	SOLUTION :
	Journal Entries
No.	Transaction	Account Title and explanation	Debit	Credit
		Bad Debt Expenses	$                     2,495
1	A	Allowance for Doubtful Accounts		$                       2,495
2	B	Bad Debt Expenses	$                     4,883
		Allowance for Doubtful Accounts		$                       4,883