Debits Credits
Accounts receivable $385,000
Allowance for doubtful accounts $2,000
Sales 950,000
Prepare the adjusting entry at December 31, 2010, for bad debts expense under each of the following independent assumptions.
(1) An aging schedule indicates that $11,750 of accounts receivable will be uncollectible.
(2) The company estimates that 1% of sales will be uncollectible.
Repeat the question above assuming that instead of a credit balance there is a $2,000 debit balance in Allowance for Doubtful Accounts.