Exercise 8-3 (Part Level Submission) Ridgewood Limited\'s general ledger reports

Question

Exercise 8-3 (Part Level Submission) Ridgewood Limited's general ledger reports a balance in Accounts Receivable of $367,000 at the end of December. (a) Assuming that Allowance for Doubtful Accounts has a credit bal December 31. (Credit account titles are automatically inde enter O for the amounts.) Enna uncollectible accounts are determined to be $40,370 by aging the accounts, record the adjusting entry at pse question pärt is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and Colla Date Account Titles and Explanation Credit Dec. 31

Explanation / Answer

Adjusting entry to be recorded to show allowance for doubtful accounts is as prepared below:

The amount of adjusting entry is the difference between adjusted balances of allowance for doubtful accounts minus (plus if debit balance) unadjusted balance of the allowance for doubtful accounts.

Opening balance of the allowance for doubtful accounts is $4,500 (credit). So the amount of adjusting entry will be $40,370 minus $4,500

Year Particulars L.F Debit ($) Credit ($) 20XX Dec-31 Bad Debt Expense (40,370-4,500) 35,870        Allowance for doubtful accounts 35,870 (For Bad debt expense recorded under allowance for doubtful account)

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