Question

Sandhill Company reports the following financial information before adjustments. Dr. Cr. Accounts Receivable $132,500 Allowance for Doubtful Accounts $3,970 Sales Revenue (all on credit) 838,100 Sales Returns and Allowances 50,780 Prepare the journal entry to record bad debt expense assuming Sandhill Company estimates bad debts at (a) 5% of accounts receivable and (b) 5% of accounts receivable but Allowance for Doubtful Accounts had a $1,630 debit balance. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

Answer:

S/n  Accounts title                                        Debit      Credit

a.      Bad Debt expenses                          $2,655

                Allowance for Doubtful debts                    $2,655

                ((132,500*5%)-3,970)

        (Being bad debt expense recorded)  

b.       Bad Debt expenses                           $8,255

                  Allowance for Doubtful debts                   $8,255

                   {(132,500*5%)+1,630]

         (Being bad debt expense recorded)