Answer:
(A) bad debt expense 16,680 debit
allowance for doubtful accounts 16,680 credit
(B) bad debt expense 16,606 debit
allowance for doubtful accounts 16,606 credit
2.-
(A) will not change, we are adjusting for the "% of sales regardless of the beginning balance
(B) bad debt expense 16,806 debit
allowance for doubtful accounts 21,806 credit
Explanation:
(A)
bad debt expense expected as 2% of credit sales
834,000 x 2% = 16,680
we are recognizing the bad debt expense, so we directly record for this amount
(B)
uncolectible 6% of AR
ending baaance we expect this as uncollectible amount
ending balance 6% of 320,100 19,206
current balance allowance (2,600) credit
adjustment 16,606
2.- B
ending balance 6% of 320,100 19,206
+ current balance allowance 2,600 debit
adjustment 21,806
