Answer:
The adjusting journal entry to record bad debt expense for the year:
Debit Bad debts expense $13,831
Credit Allowance for doubtful accounts $13,831
Explanation:
Blossom Company uses the percentage-of-receivables basis to record bad debt expense.
At the end of the year, Accounts receivable are $419,300 and 4% of accounts receivable will become uncollectible.
Estimated uncollectible = $419,300 x 4% = $16,772
Before adjusting, the allowance for doubtful accounts has a credit balance of $2,941.
Bad debts expense = $16,772 - $2,941 = $13,831
The adjusting journal entry:
Debit Bad debts expense $13,831
Credit Allowance for doubtful accounts $13,831
