Cheyenne Corp. uses the percentage-of-receivables method for recording bad debt expense. The Accounts Receivable balance is $270000 and credit sales are $1080000. Management estimates that 5% of accounts receivable will be uncollectible. What adjusting entry will Cheyenne Corp. make if the Allowance for Doubtful Accounts has a credit balance of $2700 before adjustment

Dr Bad Debts Expense 10,800

Cr Allowance for Doubtful Accounts 10,800

Explanation:

The Allowance for Doubtful Accounts needs an ending credit balance of 5% of $270,000 or $13,500. Since the preadjusted credit balance is $2,700, a credit of $10,800 will increase it to $13,500.

Cheyenne Corp. Journal entry

Dr Bad Debts Expense 10,800

Cr Allowance for Doubtful Accounts 10,800

c

explanation:

c because the item on a bank statement is also referred to as an account statement. in addition, it provides the beginning balance, ending balance, statement date, transaction date for each transaction, payee, customer name and address, statement period, the account holder's account number, and the bank's customer service number