Madison Inc. reported sales of $1,000,000, a debit balance in Accounts Receivable of $80,000, and a credit balance of $5,000 in the Allowance for Doubtful Accounts. Management anticipates bad debt losses of 1% of credit sales. Prepare the end-of-period adjusting entry to record bad debt expense

Question

Business

Ashton Snyder

20 April, 19:14

Madison Inc. reported sales of $1,000,000, a debit balance in Accounts Receivable of $80,000, and a credit balance of $5,000 in the Allowance for Doubtful Accounts. Management anticipates bad debt losses of 1% of credit sales. Prepare the end-of-period adjusting entry to record bad debt expense

+1

Answers (1)

Know the Answer?

Bambi · Answer 1

The answer follows below;

Explanation:

Sales=$1,000,000

Allowance for Doubtful Accounts=$1,000,000*1%=$10,000

Bad Debt Expense Dr.$10,000

Allowance for Bad Debts Accounts = Cr.$10,000

In sales % method, we record only % of sales as uncollectible.