Exercise 7-6 Percent of accounts receivable method P3 At each calendar year-end,

Question

Exercise 7-6 Percent of accounts receivable method P3 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 $55,000, and it estimates that 2% 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 $415 credit balance before the adjustment and (b) a $291 debit balance before the adjustment

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount Accounts Receivable            55,000.00 % uncollectible 2.00% Allowance for uncollectible Accounts              1,100.00 Particulars Dr Cr Bad Debts expense DR                  685.00 To Allowance for doubtful Accounts                  685.00 (1100 - 415) b) Bad Debts expense DR              1,391.00 To Allowance for doubtful Accounts              1,391.00 (1100 - (-291))

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