Blossom, Inc. had net sales in 2017 of $1,504,300. At December 31, 2017, before adjusting entries, the balances in selected accounts were Accounts Receivable $263,900 debit, and Allowance for Doubtful Accounts $3,070 credit. If Blossom estimates that 7% of its receivables will prove to be uncollectible. Prepare the December 31, 2017, journal entry to record bad debt expense.

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Business

Kurly

20 January, 02:10

Blossom, Inc. had net sales in 2017 of $1,504,300. At December 31, 2017, before adjusting entries, the balances in selected accounts were Accounts Receivable $263,900 debit, and Allowance for Doubtful Accounts $3,070 credit. If Blossom estimates that 7% of its receivables will prove to be uncollectible. Prepare the December 31, 2017, journal entry to record bad debt expense.

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Kennedi Mcneil · Answer 1

Data given in the question

Net sales = $1,504,300

Account receivable = $263,900

Credit balance Allowance for doubtful debts = $3,070

So, the journal entry to record the bad debt expense is shown below:

Bad debt expense A/c Dr $15,403

To Allowance for doubtful debts $15,403

(Being bad debt expense is recorded)

The computation of the bad debt expense is shown below:

= (Accounts receivable * estimated percentage given) - (credit balance of Allowance for Doubtful Accounts)

= ($263,900 * 7%) - ($3,070)

= $18,473 - $3,070

= $15,403