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16 September, 11:23

Concord Corporation uses the percentage-of-receivables basis to record bad debt expense and concludes that 4% of accounts receivable will become uncollectible. Accounts receivable are $421,300 at the end of the year, and the allowance for doubtful accounts has a credit balance of $2,921. (a) Prepare the adjusting journal entry to record bad debt expense for the year. (b) If the allowance for doubtful accounts had a debit balance of $870 instead of a credit balance of $2,921, prepare the adjusting journal entry for bad debt expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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  1. 16 September, 12:12
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    The journal entries are shown below:

    a. Bad debt expense A/c Dr $13,931

    To Allowance for doubtful debts $13,931

    (Being bad debt expense is recorded)

    It is computed below:

    = $421,300 * 4% - $2,921

    = $13,931

    b. a. Bad debt expense A/c Dr $17,722

    To Allowance for doubtful debts $17,722

    (Being bad debt expense is recorded)

    It is computed below:

    = $421,300 * 4% + $870

    = $17,722
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