Debit Credit Accounts receivable Debit $140,000 Allowance for doubtful accounts

Question

                                                                        Debit                Credit

Accounts receivable                                       Debit $140,000

Allowance for doubtful accounts                                                    Credit 730

Sales                                                                                  Credit $610,000

Sales returns and allowances    Debit    8,000

Prepare the journal entries for allowance for doubtful accounts when the estimate of uncollectible accounts is determined by taking 1) 5% of gross accounts receivable and 2) 3% of gross accounts receivable with a $730 debit allowance account balance.

Explanation / Answer

Journal entry :

No Accounts & explanation debit credit 1 Bad debt expense (140000*5%-730) 6270 Allowance for doubtful accounts 6270 (To record bad debt expense) 2 Bad debt expense (140000*3%+730) 4930   Allowance for doubtful accounts 4930 (To record bad debt expense)

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