A company has an accounts receivable balance of $120,000 and uses the allowance

Question

A company has an accounts receivable balance of $120,000 and uses the allowance method to account for uncollectible accounts. Past experience indicates that 4% of accounts receivable are uncollectible. The current balance before adjustment in the allowance for doubtful accounts is $500 (debit balance). The required adjusting journal entry includes a debit to Bad Debts Expense for: $4,300 $4,800 $5,300 $500
A company has an accounts receivable balance of $120,000 and uses the allowance method to account for uncollectible accounts. Past experience indicates that 4% of accounts receivable are uncollectible. The current balance before adjustment in the allowance for doubtful accounts is $500 (debit balance). The required adjusting journal entry includes a debit to Bad Debts Expense for: $4,300 $4,800 $5,300 $500 $4,300 $4,800 $5,300 $500
$4,300 $4,800 $5,300 $500

Explanation / Answer

Alow reqd = 4%*120000 = 4800

ALlow for Bad debts must have a credit balance.

Here it has Debit bal of 500.

So to make prov for 4800, Bad depbt exp acct has to be debited with 4800+500 = 5300

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