ACME Distribution, Inc. December 31, 2016 Adjusting Entries Continued 4) The com

Question

ACME Distribution, Inc. December 31, 2016 Adjusting Entries Continued 4) The company has estimated, based on historical information, that 4.4% of its accounts receivable will ultimately not be collected. Therefore, they provide an allowance for bad debts at that level. Calculate the appropriate amount for the allowance at December 31, 2016. Accounts receivable balance per the unadjusted trial balance S 42,400 Estimated allowance amount (Round answer to the nearest dollar and show your calculation below for full credit). Amount of adjustment needed to the allowance account (Show your calculation below to receive full credit). Complete below the adjusting journal entry necessary for the allowance for bad debts: Account description Credit Post the above entry to the trial balance in the adjustment columns.

Explanation / Answer

Estimated allowance amount = 42400 * 4.4 % = $ 1866

Amount of adjustment needed = $ 1866 ( the whole amount is taken since there is no opening balance of allowance for bad debts given )

Journal entry :-

Trial Balance :-

bad debts expense 1866 allowance for bad debts 1866

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