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Moore Products uses the allowance method in estimating uncollectible accounts. On December 31, 2022, the balance in Accounts Receivable was $610,000. An aging analysis of the accounts receivable indicated that $29,600 in accounts are expected to be uncollectible.

Prepare the adjusting entry to record estimated bad debts expense using the percentage of receivables basis under each of the following independent assumptions:
(a)
Allowance for Doubtful Accounts has a credit balance of $4,100 before adjustment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Respuesta :

The adjusting entry to record estimated bad debts expense using the percentage of receivables basis is:

Bad Debt Expense Account dr........             $25,500          

      To Allowance for Doubtful Account                      $25,500

(Being the bad debt expense is recorded)

For recording this, we credit the allowance for doubtful debts, which decreased the value of the assets and debit the bad debt expenditure, which raised the expenses.

Additionally, since there is a credit balance, the account receivable is reduced accordingly.

The amount for bad debt expense Account = $29,600 - $4,100

                                                         = $25,500

Hence, The adjusting entry to record estimated bad debts expense using the percentage of receivables basis is:

Bad Debt Expense Account dr........             $25,500          

      To Allowance for Doubtful Account                      $25,500

(Being the bad debt expense is recorded)

Learn more about Doubtful debts:

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