Prepare the Adjusting Journal Entry to Record the Estimate for Bad

question 111

Essay

Prepare the adjusting journal entry to record the estimate for bad debts assuming:
On December 31 of the current year,a company's unadjusted trial balance revealed the following: accounts receivable of $185,600; sales revenue of $1,280,000; (75% were on credit); and allowance for doubtful accounts of $1,600 (credit balance).
1.Bad debts expense is estimated to be 1.5% of credit sales.
2.6% of the accounts receivable balance is assumed to be uncollectible

---

Definitions:

Auction With Reserve

An auction at which the auctioneer has the right to withdraw goods and not sell them if acceptable bids are not made.

Enforced Auction

A legal process where items are sold to satisfy debts owned by their owner.

Firm Offer

In contract law, an offer that is expressly made irrevocable for a specified period of time by the offeror.

Merchant

An individual or company involved in wholesale or retail trade, especially one dealing with goods, services, or commodities for profit.