The Accounts Receivable balance for Smith Company at December 21, 2014, was $100
ID: 2586291 • Letter: T
Question
The Accounts Receivable balance for Smith Company at December 21, 2014, was $100,000. Smith had credit sales of $500,000. The Allowance for Bad Debit has a current balance of a $2,500 credit balance. Based on last year Bad Debt is estimated to be 3% of accounts receivable. What would be the correct journal entries to make to record the Bad Debt Expense for the year.
A. Debit Bad Bebt Expense $500 and Credit Allowance For Bad Debt $500
B. Credit Allowance For Bad Debt $3000 and Credit Allowance For Bad Debt $3000
C. Credit Allowance For Bad Debt $500 and Debit Bad Bebt Expense $500
D. Debit Bad Bebt Expense $3000 and Credit Allowance For Bad Debt $3000
Explanation / Answer
Estimated bad debts = 100,000*3% 3000 Adjustment entry = 3000-2500 500 Accounting titles & Explanations Debit Credit Bad debts expense 500 Allowance for Bad debts 500 hence option a is the correct answer Debit Bad debts expense $500 and credit allowance for bad debts $500
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