Providing for Doubtful Accounts

At the end of the current year, the accounts receivable account has a debit balance of $925,000 and sales for the year total $10,490,000.

Determine the amount of the adjusting entry to provide for doubtful accounts under each of the assumptions (a through d) listed.

1. The allowance account before adjustment has a debit balance of $12,500. Bad debt expense is estimated at 1/4 of 1% of sales.
2. The allowance account before adjustment has a debit balance of $12,500. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $40,000.
3. The allowance account before adjustment has a credit balance of $6,300. Bad debt expense is estimated at 1/2 of 1% of sales.
4. The allowance account before adjustment has a credit balance of $6,300. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $52,300.