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g craigmont uses the allowance method to account for uncollectible accounts. its year-end unadjusted trial balance shows accounts receivable of $118,500, allowance for doubtful accounts of $805 (credit) and sales of $995,000. if uncollectible accounts are estimated to be 6% of accounts receivable, what is the amount of the bad debts expense adjusting entry?

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tutorconsortium113

Here, bad debt charge is credited for decreasing the assets and debited for increasing the expenses.Additionally, the assets and expenses both have a regular debit balance.

What is the bad debt expense adjusting entry's dollar amount?

By debiting the accounts receivable account and crediting the bad debt expense account, respectively,

For instance, if customer Lucy has a $125 invoice that is 91 days overdue, your bad debt expense journal entry would seem as follows:

Bad Debt A/c Dr                                     $7,105

      To Allowance for Doubtful Debts                 $7,105

The computation is shown below:

Amount Uncollectible is

= $128,500 × 6%

= $7,710

Now the bad debt is

= $7,710 - $905

= $7,105

The adjsuting entry would be

Bad Debt A/c   Dr                                   $7,105

      To Allowance for Doubtful Debts                $7,105

(being bad debt expense is recorded)

here bad debt expense is debited as it increased the expenses and credited the allowance as it decreased the assets. Also the expenses and assets contains normal debit balance

To learn more about bad debts expense refer

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