Question - At December 31, 2012, Warm Weather Travel has an Accounts Receivable balance of $91,000. Allowance for Doubtful Accounts has a credit balance of $840 before the year-end adjustment. Service Revenue for 2012 was $600,000. Warm Weather estimates that doubtful-account expense for the year is 1% of sales.
Requirement
Make the year-end entry to record Doubtful-Account Expense. Show how Accounts Receivable and Allowance for Doubtful Accounts are reported on the balance sheet.
Prepare the year-end entry to record Doubtful Account Expense. (Record debits first, then credits. Explanations are not required.)
Show how the Accounts Receivable and the Allowance for Doubtful Accounts are reported on the balance sheet.