Answer:
(A)
bad debt expense 1,500 debit
account receivable 1,500 credit
(B)
bad debt expense 9,490
allowance for doubtful accounts 9,490
(C)
bad debt expense 10,015
allowance for doubtful accounts 10,015
Explanation:
(A)
Direct write-off doesn't use allowance,
bad debt is done directly to account receivable.
(B)
allowance = 11% of AR = 11% of 109,000 = 11,990
balance (2,500 credit)
11,990 - 2,500 = 9,490
(C)
allowance = 9% of AR = 9% of 109,000 = 9810
balance 205 debit
9,810 + 205 = 10,015
Comments: the allowance is expected to be 9% or 11% of AR
so the goal for B and C is to reach a final balance of 9% or 11% of AR
so we have to subtract the balance from the expected allowance to knwo the adjustment.
