Answer:
Debit Bad debt expense $13,314
Credit Allowance for doubtful account $13,314
<em>(To record bad debt expense)</em>
Explanation:
The following transactions took place in 2018:
Debit Accounts receivable $457,000
Credit Sales revenue $457,000
<em>(To record sales revenue on account)</em>
Debit Cash $323,000
Credit Accounts receivable $323,000
<em>(To record collection on account)</em>
Debit Allowance for doubtful account $6,100
Credit Accounts receivable $6,100
<em>(To record write-off of accounts receivable)</em>
The net impact of the above journals on accounts receivable is $24,000 + $457,000 - $323,000 - $6,100 = $151,900.
6% of $151,900 = $9,114. However, the write-off would reduce the allowance account as follows: $1,900 - $6,100 = $4,200 debit balance, the required bad debt expense would be $9,114 + $4,200 = $13,314. The addition is necessary in order to reinstate the allowance account to $9,114. The required adjustment is recorded under the answer section.
