Question

On June 30 (the end of the period), Brown Company has a credit balance of $2,360 in Allowance for Doubtful Accounts. An evaluation of accounts receivable indicates that the proper balance should be $28,690. Journalize the appropriate adjusting entry.

Answer 1

Answer:

Dr Bad debt expense 26,330

    Cr Allowance for doubtful accounts 26,330

Explanation:

credit balance of allowance for doubtful accounts = $2,360

the correct balance should be $28,690, so the account must be adjusted by $28,690 - $2,360 = $26,330

Dr Bad debt expense 26,330

    Cr Allowance for doubtful accounts 26,330

Allowance for doubtful accounts is a contra asset account with a credit balance that reduces the value of accounts receivable.