Ask Question
28 May, 21:02

At the end of a period (before adjustment), Allowance for Doubtful Accounts has a credit balance of $250. The credit sales for the period total $500,000. If the company estimates uncollectible accounts expense at 1% of credit sales, the amount of bad debt expense to be recorded in an adjusting entry is $4,750.

a. True.

b. False.

+5
Answers (1)
  1. 28 May, 21:53
    0
    b. False

    Explanation:

    The company estimates that 1% of $500,000, which is $5,000, will be uncollectible. Under the Allowance method of bad debts, the accounts department will record the following entry:

    Bad Debts (Dr.) $5,000

    Allowance for Doubtful Accounts (Cr.) $5,000

    So, the amount of bad debt expense to be recorded in the adjusting entry is $5,000 and not $4,750. The credit of $5,000 to contra-asset account will result in a closing balance of $5,250 for Allowance for Doubtful Accounts.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “At the end of a period (before adjustment), Allowance for Doubtful Accounts has a credit balance of $250. The credit sales for the period ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers