At the end of each year, Dutch Supply Co. uses the simplified balance sheet approach (i.e., percentage of accounts receivable) to estimate bad debts. On December 31, 2020, it has outstanding accounts receivable of $163,000 and estimates that 3.5% will be uncollectible.

Required:

a.Give the entry to record bad debt expense for 2020 under the assumption that the Allowance for Doubtful Accounts has a $1,990 debit balance before the adjustment.

transaction list

• 1
• Record the entry for estimated bad debts.

b.Give the entry under the assumption that the Allowance for Doubtful Accounts has a $1,990 credit balance before the adjustment.

transaction list

1

Record the entry for estimated bad debts.