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Gretchen's Bake Shop uses the % of receivables method for recording bad debt expense. The A/R balance is $193,000 and credit sales are $5,320,000. Management
Gretchen's Bake Shop uses the % of receivables method for recording bad debt expense. The A/R balance is $193,000 and credit sales are $5,320,000. Management estimates that 3% of accounts receivable will be uncollectible. 1. What adjusting entry will Gretchen's Bake Shop make to record bad debt expense if the Allowance for Doubtful Accounts has a $4,800 debit balance and the Bad Debt Expense has a $3.100 debit balance before adjustment? (8 points) 2. What will the ending balances in Bad Debt Expense and Allowance for Doubtful Accounts be? (2 points) Show your work
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