Question

Madison Inc. reported sales of $1,000,000, a debit balance in Accounts Receivable of $80,000, and a credit balance of $5,000 in the Allowance for Doubtful Accounts. Management anticipates bad debt losses of 1% of credit sales. Prepare the end-of-period adjusting entry to record bad debt expense

Answer 1

Answer:

The answer follows below;

Explanation:

Sales=$1,000,000

Allowance for Doubtful Accounts=$1,000,000*1%=$10,000

Bad Debt  Expense Dr.$10,000

Allowance for Bad Debts Accounts=  Cr.$10,000

In sales % method, we record only % of sales as uncollectible.