Question

Assume that Simple Co. had credit sales of $247,000 and cost of goods sold of $147,000 for the period. Simple uses the aging method and estimates that the appropriate ending balance in the Allowance for Doubtful Accounts is $2,700. Before the end-of-period adjustment is made, the Allowance for Doubtful Accounts has a credit balance of $220. What amount of Bad Debt Expense would the company record as an end-of-period adjustment

Answer 1

Answer:

$2,480

Explanation:

As the Allowance of Doubtful Accounts already has the credit balance of $2,20, and we need $2,700 at the end of the year. We know that Allowance of Doubtful Accounts has credit nature so it needed $2,480 ($2,700 - $2,20) to be adjusted at the end of the year, to make the adjusted balance equals to $2,700.

Adjusting Entry Will be as follow

Dr. Bad Debt Expense                         $2,480

Cr. Allowance of Doubtful Accounts   $2,480