DOUBTFUL ACCOUNTS 8. At the end of each year, Schnecksville Inc. the balance she

Question

DOUBTFUL ACCOUNTS 8. At the end of each year, Schnecksville Inc. the balance sheet approach to estimate bad debts. On December 31, 2014, it has outstanding accounts receivable of $176,600 and estimates that 3.5% will be uncollectible. a. Give the adjusting entry to record bad debts expense for 2014 under the assumption that the Allowance for Bad Debts had a $1,470 credit balance before the adjustment. b. Give the adjusting entry to record bad debts expense of 2014 under the assumption that the Allowance for Bad Debts had a $1,235 debit balance before the adjustment.

Explanation / Answer

Account receivables at the end of December 31,2014 = $176600 Uncollectible = 3.5% * $176600 = $6181 Answer 1 Adjusting entry Account title Debit Credit Bad debt 4711 Allowance for bad debt 4711 Answer 2 Adjusting entry Account title Debit Credit Bad debt 6181 Accounts receivable 1235 Allowance for bad debt 7416

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