Answer:
1. $372,150
2. $650
Explanation:
1. Smith's preadjustment balance in accounts receivable on December 31, 2019:
= Accounts Receivable on January 1, 2019 + Credit sales - Collected accounts receivable - uncollectible accounts receivable
= $386,000 + $2,895,000 - $2,905,000 - $3,850
= $372,150
2. Smith's preadjustment balance in allowance for doubtful accounts on December 31, 2019:
= Allowance for Doubtful Accounts (a credit balance) on January 1, 2019 - uncollectible accounts receivable
= $4,500 - $3,850
= $650
3. The Journal entry is as follows:
Bad Debt Expense ($3,800 - $650) A/c Dr. $3,150
To Allowance for Doubtful Accounts $3,150
(Record adjusting entry for bad debt expense estimate)
