Bauer Company uses the percentage of sales method for computing bad debt expense. As of January 1,

Question:

Bauer Company uses the percentage of sales method for computing bad debt expense. As of January 1, 2012, the balance of Allowance for Bad Debts was $300,000. Write-off s of uncollectible accounts during 2012 totaled $360,000. Reported bad debt expense for 2012 was $430,000, computed using the percentage of sales method.
Thomas & Steff en, the auditors of Bauer’s financial statements, compiled an aging analysis of Bauer’s accounts at the end of 2012. This analysis has led Thomas & Steff en to estimate that, of the Bauer has as of the end of 2012, $650,000 will ultimately prove to be uncollectible.
Given their analysis, Thomas & Steff en, the auditors, think that Bauer should make an adjustment to its 2012 financial statements. What adjusting journal entry should Thomas & Steff en suggest?

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...