Answer:
Kingston Co.
Adjusting Journal Entry to record bad debt expense for the year:
Account Titles and Explanation Debit Credit
Bad Debts Expense $2,700
Allowance for Doubtful Accounts $2,700
To record bad debt expense for the year and bring the allowance for doubtful accounts to a credit balance of $4,200.
Explanation:
a) Data and Analysis:
Accounts receivable at the end of the year = $420,000
Allowance for doubtful accounts (credit balance) = $1,500
Estimated uncollectible = 1% of account receivable
New credit balance for allowance for doubtful accounts = $4,200
Adjustment to increase the allowance for doubtful accounts to the above new balance = $2,700 ($4,200 - $1,500)
Bad Debts Expense $2,700 Allowance for Doubtful Accounts $2,700
