Question 2

a.

Providing for Doubtful Accounts At the end of the current year, the accounts receivable account has a debit balance of $992,000 and sales for the year total $11,240,000. a. The allowance account before adjustment has a debit balance of $13,400. Bad debt expense is estimated at 1/2 of 1% of sales. b. The allowance account before adjustment has a debit balance of $13,400. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $42,900. c. The allowance account before adjustment has a credit balance of $5,700. Bad debt expense is estimated at 1/4 of 1% of sales. d. The allowance account before adjustment has a credit balance of $5,700. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $47,300. Determine the amount of the adjusting entry to provide for doubtful accounts under each of the assumptions (a through d) listed above. b