Question #10 (Continued- Percent of Accounts Receivable )

The Jones Company uses the Percent of Accounts Receivable 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. Its outstanding Accounts Receivable are $125,000, the Allowance for Accounts has a $1,400 debit balance. Estimated bad debts are 2% of outstanding Accounts Receivable. 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 has a credit balance of $750 in the Allowance for Doubtful Accounts.

The Lethbridge Company estimates that is bad debts expense is 1% of Accounts Receivable. On December 31, 2022, the company had a balance in its Accounts Receivable of $2,450,000, and a credit balance of $3,000 in the Allowance for Doubtful Accounts. Prepare the adjusting journal entry to record bad debts expense for the year.