Providing for Doubtful Accounts
At the end of the current year, the accounts receivable account has a balance of $814,000 and sales for the year total $9,230,000.
Determine the amount of the adjusting entry to provide for doubtful accounts under each of the following independent assumptions:
a. The allowance account before adjustment has a negative balance of $(11,000). Bad debt expense is estimated at 1/2 of 1% of sales.
b. The allowance account before adjustment has a negative balance of $(11,000). An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $35,200.
c. The allowance account before adjustment has a positive balance of $5,900. Bad debt expense is estimated at 1/4 of 1% of sales.
d. The allowance account before adjustment has a positive balance of $5,900. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $49,000.