Answer:
$16,300
Explanation:
When a company makes sales on account/credit, revenue is recognized as long as the recognition criteria is met. The entries posted are debit accounts receivable and credit revenue.
Should the company assess that part (or even all) of these receivables may be incollectible, a provision is made. This requires that the amount so determined by the company that may be incollectible is accounted for by
Debit Bad debt expense
Credit Allowance for doubtful debt
Hence the bad debt expense to be recorded is $16,300
Answer:
Dr Bad debt expense 16,300
Cr Allowance for doubtful accounts 16,300
Explanation:
The allowance for doubtful accounts is an estimate of the amount of accounts receivable that the company will probably not be able to collect. Once this amount is estimated, the company must record that amount as bad debt expense and allowance for doubtful accounts.
Allowance for doubtful accounts is a contra asset account that reduces the value of accounts receivable, and needs to be adjusted as the estimate of uncollectible accounts changes.
