Answer:
The adjustment Brinkley records for Allowance for Uncollectible Accounts using the percentage-of-credit-sales method:
Debit Bad debts expense $6,500
Credit Allowance for Uncollectible Accounts $6,500
Explanation:
Brinkley Incorporated’ uses the percentage-of-credit-sales method - application a flat percentage to the total amount of net credit sales for the period to estimate uncollectible.
Estimated uncollectible = 5% x $130,000 = $6,500
The company records an Allowance for Uncollectible Accounts for $6,500 while simultaneously reporting $6,500 in bad debts expense. The adjustment entry:
Debit Bad debts expense $6,500
Credit Allowance for Uncollectible Accounts $6,500
The balance in the Allowance for Uncollectible Accounts after adjustment is $6,500 + $3,500 = $10,000
