The adjusting entry that the company should pass at the end of the current year to record the bad debts expense:
Bad Debts Expense 16,900
Allowance for Doubtful Accounts 16,900
<h3>What is an allowance for doubtful accounts?</h3>
A contra account called an allowance for doubtful accounts nets against the total receivables shown on the balance sheet to only show the amounts anticipated to be paid. The percentage of accounts receivable that are anticipated to be uncollectible is estimated by the allowance for doubtful accounts.
A negative balance in the allowance for doubtful accounts means that more accounts than anticipated have been written off. A contra asset account with a typical credit balance is the allowance for doubtful accounts.
Under the aging method, the adjusting entry for bad debt expense is calculated using the following formula:
Estimate of uncollectible accounts - (+) Current credit (debit) balance in the allowance for doubtful accounts = Bad debt expense
Hence, The adjusting entry that the company should pass at the end of the current year to record the bad debts expense is given above.
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"Your question is incomplete, probably the complete question/missing part is:"
Bad Debts Expense 16,500
Allowance for Doubtful Accounts 16,500
Bad Debts Expense 16,100
Allowance for Doubtful Accounts 16,100
Bad Debts Expense 16,900
Allowance for Doubtful Accounts 16,900
Accounts Receivable 16,500
Bad Debts Expense 400
Sales 16,900
Accounts Receivable 16,900
Allowance for Doubtful Accounts 16,900
