Tanning company analyzes its receivables to estimate bad debt expense. the accounts receivable balance is $302,000 and credit sales

Tanning company analyzes its receivables to estimate bad debt expense. the accounts receivable balance is $302,000 and credit sales are $1,000,000. an aging of accounts receivable shows that approximately 4% of the outstanding receivables will be uncollectible. what adjusting entry will tanning company make if the allowance for doubtful accounts has a credit balance of $1,800 before adjustment?

Answers

Allowance for Doubtful Accounts has a credit balance of $1,800 before adjustment and has to be adjusted up to $12,080 by $10,280. by debiting 'Provisions for doubtful debts' and crediting 'Account Receivable'

Explanation:

If Tanning Company analyzes its receivables to estimate bad debt expense and the accounts receivable balance is $302,000 and the aging of accounts receivable shows that approximately 4% of the outstanding receivables will be uncollectible. Therefore the adjusting entry that Tanning Company will make if the Allowance for Doubtful Accounts has a credit balance of $1,800 before adjustment will be an 'increment to the current balance of $1,800 to be adjusted up to $12,080 by $10,280. This is done by debiting 'Provisions for doubtful debts' and crediting 'Account Receivable'

JOURNAL ENTRIES

Debit ..Provision for Doubtful Debts10,280

CreditAccount Receivable10,280

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