Linhart co uses the percentage of accounts receivable basis to record bad debts expense. It estimates that 1% of accounts receivable will become uncolletible. Accounts receivable are $450,000 at the end of the year, and the allowance for doubtful accounts has a credit balance of $1,500.
My journal entry is.....
Bad debt exp 470,900
Allowance for doubtful accounts 470,900
Here is my question... If the allowance for doubtful accounts had a debit balance of $800 instead of a credit balance of $1,500, determine the amount to be reported for bad debts expense.