Exercise 6 7:

The following items were extracted from the 2012 financial records of Cummins Inc. (dollars in millions):

Allowance for doubtful accounts 12 (cr.)

During the following year, the company wrote off $5 of accounts receivable as uncollectible and then estimated $6 of the years receivables to be uncollectible. The company did not recover any previously written-off accounts.

1. Prepare the entry to record the bad debt expense.

2. Compute the final balance in allowance for doubtful accounts.