Answer:
The ending balance of the allowance account is $26,000.
Explanation:
Aging Amount Loss Percent Uncollectible Amount
Not yet due $600,000 1% $6,000
180 days $100,000 10% $10,000
> 180 days $50,000 20% $10,000
Total $750,000 $26,000
The allowance account had a debit balance of $1,000 before adjustment. In order to reinstate the account to $26,000, the adjustment to bad debt expense becomes $1,000 + $26,000 = $27,000, which is recorded as follows:
Debit Bad debt expense $27,000
Credit Allowance for doubtful accounts $27,000
<em>(To record bad debt expense during the year)</em>
