Answer:
Given that,
Accounts receivable = $435,000
Debit Allowance for Doubtful Accounts = 1,250
Credit Net Sales = 2,100,000
Ending account receivable to be uncollectible = 3.5%
Estimated bad debts:
= Accounts Receivable × 3.5% + Debit balance in Allowance for Doubtful Accounts
= (435,000 × 3.5%) + 1,250
= $16,475
Therefore, the journal entry is as follows:
Bad debts expense A/c Dr. $16,475
To Allowance for Doubtful Accounts $16,475