A company has the following unadjusted account balances at December 31,of the current year; Accounts Receivable of $185,700 and Allowance for Doubtful Accounts of $1,600 (credit balance).The company uses the aging of accounts receivable to estimate its bad debts.The following aging schedule reflects its accounts receivable at the current year-end:
1.Calculate the amount of the Allowance for Doubtful Accounts that should appear on the December 31,of the current year,balance sheet.
2.Prepare the adjusting journal entry to record bad debts expense for the current year .
Definitions:
Work Force
The total number of people employed or in search of employment in a particular company, sector, or economy.
Layoff
A reduction in the workforce by a company, often to cut costs.
Commission
A fee paid to an employee or agent for facilitating a sale or transaction, usually calculated as a percentage of the sale price.
Transaction
An instance of buying or selling, or the exchange of goods, services, or funds.
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