Whispering Winds Corp. uses the percentage-of-receivables method for recording b

Question

Whispering Winds Corp. uses the percentage-of-receivables method for recording bad debt expense. The Accounts Receivable balance is $290000 and credit sales are $1160000. Management estimates that 5% of accounts receivable will be uncollectible. What adjusting entry will Whispering Winds Corp. make if the Allowance for Doubtful Accounts has a credit balance of $2900 before adjustment? Bad Debt Expense 11600 Allowance for Doubtful Accounts 11600 Bad Debt Expense 8700 Accounts Receivable 8700 Bad Debt Expense 17400 Allowance for Doubtful Accounts 17400 Bad Debt Expense 5800 Allowance for Doubtful Accounts 5800

Explanation / Answer

Bad debts expense 11600 =(290000*5%)-2900         Allowance for doubtful accounts 11600 Option 1 is correct

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