Answer:
Debit Bad debt expense $19,000
Credit Allowance for doubtful debt $19,000
Explanation:
When a company makes sales on account, debit accounts receivable and credit sales. Based on assessment, some or all of the receivables may be uncollectible.
To account for this, debit bad debit expense and credit allowance for doubtful debt. Should the debt become uncollectible (i.e go bad), debit allowance for doubtful debt and credit accounts receivable.
Where a debit that had previously been determined to have gone bad gets settled, debit cash and credit bad debt expense.
Amount that may be uncollectible
= 4% * $600,000
= $24,000
Given that the Allowance for Doubtful Accounts has a $5,000 credit balance before adjustment, the additional amount to be adjusted for
= $24,000 - $5,000
= $19,000
Answer:
$20,000
Explanation:
When a company makes sales on account, debit accounts receivable and credit sales. Based on assessment, some or all of the receivables may be uncollectible.
To account for this, debit bad debit expense and credit allowance for doubtful debt. Should the debt become uncollectible (i.e go bad), debit allowance for doubtful debt and credit accounts receivable.
However, in the direct writeoff method, estimates of uncollectible receivables are posted directly into the accounts receivable and not into the allowance account.
The amount in the accounts receivable before write off
= $150,000 - $83,000
= $67,000
Amount written of is $20,000, this will be posted as a debit to bad debt expense and a credit to accounts receivable.
Here, in the given case, Mort was offered a <u>line of credit </u>financial facility. Therefore, Option D is the correct choice.
<h3>What is a line of credit?</h3>
A line of credit is a versatile mortgage from a monetary group that includes a described amount of cash that you could access as needed and pay off both right now or over time. Interest is charged on a line of credit as quickly as money is borrowed.
The missing information in the question is given below:
A. revolving credit agreement.
B. asset guarantee pledge.
C. pledging agreement.
D. line of credit.
Therefore, Here, in the given case, Mort was offered a<u> line of credit </u>financial facility. Therefore, Option D is the correct choice.
Learn more about line of credit:
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