Answer:
December 31, 202x, adjustment to allowance for doubtful accounts
Dr Bad debt expense 48,000
Cr Allowance for doubtful accounts 48,000
Explanation:
total estimated bad debt = $600,000 x 10% = $60,000
allowance for doubtful accounts balance = $12,000
this account must be increased by $60,000 - $12,000 = $48,000
Allowance for doubtful accounts is a contra asset account that decreases the net balance of accounts receivable. In this case, the net balance of accounts receivable after the adjustment = $600,000 - $60,000 = $540,000
