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Anonymous

Feb 16, 2025

At each calendar year-end, Mazie Supply Co. uses the percent of accounts receivable method to estimate bad debts. On December 31,

At the end of each calendar year, Mazie Supply Co. uses the percent of accounts receivable method to estimate bad debts. As of December 31, the company has outstanding accounts receivable totaling $113,500 and estimates that 6% of this amount will be uncollectible. Please prepare the adjusting entry to record bad debts expense for the year ended December 31, assuming that the Allowance for Doubtful Accounts has: (a) a credit balance of $1,930 before the adjustment and (b) a debit balance of $568 before the adjustment.

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Anonymous

Dec 19, 2024

Journal entries(a)Dr. Bad Debt Expense                         $4,880Cr. Allowance for Doubtful Accounts $4,880 (b)Dr. Bad Debt Expense                         $7,378Cr. Allowance for Doubtful Accounts $7,378Explanation:Bad debt Expense will be calculated using the percentage of debt loss. The expense will be calculated using the account receivable balance. Closing Value of the Allowance for Doubtful Accounts will be as followClosing Balance = $113,500 x 6% = $6,810(a)As Allowance for Doubtful Accounts already have credit balance of $1,930 we need to adjust the remainder to make the closing balance of Allowance for Doubtful Accounts $6,810 at the year end.Adjustment Value = $6,810 - $1,930 = $4,880(b)As Allowance for Doubtful Accounts already have debit balance of $568 we need to adjust the remainder to make the closing balance of Allowance for Doubtful Accounts $6,810 at the year end.Adjustment Value = $6810 + $568 = $7,378
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