On june 30 (the end of the period), brown company has a credit balance of $2,365 in allowance for doubtful accounts. an evaluation of accounts receivable indicates that the proper balance should be $28,300.journalize this recognition.

Bad Debts Expense          $ 25,935 ( debit)

Allowance for Doubtful Debts                $ 25, 935 (Credit)

Explanation:

Difference of $28,300- $2365= $ 25,935

As $ 2365 is already credited to allowance for doubtful debts it should be deducted from the balance to make  the adjustment so the total remains the same.

Bad Debts Expense          $ 25,935 ( debit)

Allowance for Doubtful Debts                $ 25, 935 (Credit)

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