Problem - Providing for Doubtful Accounts
At the end of the current year, the accounts receivable account has a debit balance of $866,000 and sales for the year total $9,820,000.
1. The allowance account before adjustment has a credit balance of $11,700.Bad debt expenseis estimated at 3/4 of 1% of sales.
2. The allowance account before adjustment has a credit balance of $11,700. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $37,400.
3. The allowance account before adjustment has a debit balance of $7,900. Bad debt expense is estimated at 1/2 of 1% of sales.
4. The allowance account before adjustment has a debit balance of $7,900. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $65,600.
Determine the amount of the adjusting entry to provide for doubtful accounts under each of the assumptions (a through d) listed above.