Answer:
The ending balance in the Allowance for Bad Debts is 20,500 CREDIT
Explanation:
The ending balance of Allowance for bad debts would be the 2.5% of sales
The adjustment is made to get the allowance for Bad Debt match the estimate uncollectible ammounts.
Notice it state <em>"company adjusted for bad debt expense"</em>
This means<u> it debit this account as much as it needed to be</u> to make allowance match the estimate allowance.
The write-off are transaction durign the period. They are irrelevant
So the ending balance is:
<em>2.5% of credit sales of 820,000 = $20,500</em>
It is important to remember that <u>Allowance is a counter-asset account</u>. His <em>normal balance is credit</em>, so the<u> final balance is credit.</u>