Question

Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $354,000 and credit sales are $1,000,000. An aging of accounts receivable shows that approximately 4% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $1,400 before adjustment

Answer 1

Answer:

Dr Bad Debt Expense $12,760

Cr Allowance for Doubtful Accounts $12,760

Explanation:

Based on the information given the adjusting journal entry that Tanning Company will make if the Allowance for Doubtful Accounts has a credit balance of the amount of $1,400 before adjustment will be :

Dr Bad Debt Expense $12,760

Cr Allowance for Doubtful Accounts $12,760

[(4%*$354,000)-$1,400]