Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

22. Georgia Company uses the allowance method of accounting for bad debts. Georgia estimates that uncollectibles for the year will be 4% of accounts receivable.

22. Georgia Company uses the allowance method of accounting for bad debts. Georgia estimates that uncollectibles for the year will be 4% of accounts receivable. Total accounts receivable for the year are $100,000. The prior-period balance of the Allowance for Doubtful Accounts account is $0. Georgia determines it cannot collect $600 from Gwinnett a credit customer. What is the journal entry to record the uncollectible amount on the books of Georgia?

A. Debit Bad Debt Expense $600; Credit Accounts Receivable $600.

B. Debit Bad Debt Expense $400; Credit Accounts Receivable $400.

C. Debit Allowance for Doubtful Accounts $600; Credit Accounts Receivable $600.

D. Debit Bad Debt Expense $4,000; Credit Allowance for Doubtful Accounts $4,000.

I know the answer is C. But can you explain why? Thank you

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contemporary Auditing Real Issues And Cases

Authors: Michael Chris Knapp

9th International Edition

1133187900, 978-1133187905

More Books

Students also viewed these Accounting questions