Answer:
The amount to be debited to bad debt expense to adjust for allowance for doubtful accounts is $2,275, recorded as follows:
Debit Bad debt expense $2,275
Credit Allowance for doubtful accounts $2,275
<em>(To recognize bad debt expense for the year)</em>
Explanation:
The aging schedule of Gidget Inc. as at December 31, 2020
Status Amount Credit loss rates Estimated Bad debt
Not past due $455,000 0.5% $2,275
Past due 1 - 30 days $108,000 1% $1,080
Past due 31 - 60 days $55,000 2% $1,100
Past due over 60 days $14,000 8% $1,120
Total $632,000 $5,575
Since the balance in allowance for doubtful accounts is $3,300 credit, the bad debt expense would therefore be $2,275 ($5,575 - $3,300).
