Question

Gonzalez Company has been in business several years. At the end of the current year, the ledger shows the following: Accounts Receivable $ 318,600 Dr. Sales Revenue 2,301,300 Cr. Allowance for Doubtful Accounts 6,600 Cr. Bad debts are estimated to be 5% of accounts receivables. Prepare the entry to adjust Allowance for Doubtful Accounts.

Answer 1

Answer:

Allowance for Doubtful Accounts is $9330

Explanation:

given data

Accounts Receivable = $318,600 Dr.

Sales Revenue = 2,301,300 Cr.

Allowance for Doubtful Accounts = 6,600 Cr.

Bad debts estimated = 5% of accounts receivables

to find out

Prepare entry Allowance for Doubtful Accounts

solution

we get here required allowance that is

required allowance = $318,600 × 5%

required allowance = $15930

so bad debt expense that is = required allowance - Allowance for Doubtful Accounts    ................1

so bad debt expense that is $15930 - $6,600

bad debt expense = $9330

so

        particular                                           debt               credit

bad debt expense                                   $9330

Allowance for Doubtful Accounts                                   $9330