Question #10 - Bad Debts (Percent of Sales)

The Jones Company uses the Percent of Sales method of estimating its bad debts expense for the year. In 2022, the company had sales of $450,000, of which $150,000 were in cash. Estimated bad debts are 2% of credit sales. Prepare the adjusting journal entry to record bad debts expense for the year. Refer to the information for the Jones Company above. Record the adjusting entry for bad debts assuming that Jones Company estimates that bad debts are 1.5% of total sales.

The Lethbridge Company estimates that is bad debts expense is 1% of credit sales using the Percent of Sales method. In 2022, the company had sales of $2,450,000, of which $1,150,000 were credit sales. Prepare the adjusting journal entry to record bad debts expense for the year.