EX 8-6 PROVIDING FOR DOUBTFUL ACCOUNTS

At the end of the current year, the accounts receivable account has a debit balance of $1,935,000 and sales for the year total $26,710,000. Determine the amount of the adjusting entry to provide for doubtful accounts under each of the following assumptions:

a. The allowance account before adjustment has a debit balance of $10,200. Bad debt expense is estimated at 1/2 of 1% of sales.

b. The allowance account before adjustment has a debit balance of $10,200. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $175,000

c. The allowance account before adjustment has a credit balance of $25,760. Bad debt expense is estimated 3/4 of 1% of sales.

d. The allowance account before adjustment has a credit balance of $25,760. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $170,420.