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At the end of the current year, using the aging of receivable method, management estimated that $33,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a credit balance of $555. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Respuesta :

Answer:

Given that,

Desired balance in allowance account = $33,750 (Credit)

Current balance = $555 (Debit)

Adjustment for allowance accounts:

= Desired balance in allowance account - Current balance

= $33,750 - $555

= $33,195

Therefore, the journal entry is as follows:

Bad debt expense A/c Dr. $33,195

        To Allowance for doubtful account    $33,195

(To record the estimated bad debts expense)

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