Gonzalez company has been in business several years. at the end of the current year, the ledger shows the following: accounts receivable $ 318,600 dr. sales revenue 2,301,300 cr. allowance for doubtful accounts 6,600 cr. bad debts are estimated to be 5% of accounts receivables. prepare the entry to adjust allowance for doubtful accounts.

Allowance for Doubtful Accounts is $9330

Explanation:

given data

Accounts Receivable = $318,600 Dr.

Sales Revenue = 2,301,300 Cr.

Allowance for Doubtful Accounts = 6,600 Cr.

Bad debts estimated = 5% of accounts receivables

to find out

Prepare entry Allowance for Doubtful Accounts

solution

we get here required allowance that is

required allowance = $318,600 × 5%

required allowance = $15930

so bad debt expense that is = required allowance - Allowance for Doubtful Accounts    1

so bad debt expense that is $15930 - $6,600

bad debt expense = $9330

so

        particular                                           debt               credit

bad debt expense                                   $9330

Allowance for Doubtful Accounts                                   $9330      

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