Answer:
Bad Debt Expense $24,000 Dr
Allowance for Doubtful Accounts $24,000 Cr
Explanation:
Data:
BB = Beginning Balance = $1,000
CS = Credit Sales = $500,000
CH = Cash Sales = $500,000
SM = Percentage Sales Method = 5% = 0.05
U = Uncollectible = $25,000
AR = Accounts Receivable = $200,000
ADA = Allowance for Doubtful Accounts = ?
Calculations:
ADA = U - BB = $25,000 - $1,000 = $24,000
Net Realizable Cash Value = AR - ADA = $200,000 - $24,000 = $176,000
Balance in the Allowance Account after the adjusting entry = BB + ADA = $1,000 + $24,000 = $25,000
Journal entry:
Bad Debt Expense $24,000 Dr
Allowance for Doubtful Accounts $24,000 Cr
Hope this helps!
