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Your company uses the income statement approach for estimating bad debt
Your company uses the income statement approach for estimating bad debt. For the year ending December 31, 2020, credit sales amounted to $830,000. The estimated bad debt is 0.5% of credit sales. Prepare the journal entry to record bad debt expense for the year.
Do not enter dollar signs or commas in the input boxes.
DateAccount Title and ExplanationDebitCreditDec 31Answer
Accounts Payable
Accounts Receivable
Accumulated Depreciation
Advertising Expense
Allowance for Doubtful Accounts
Bad Debt Expense
Cash
Notes Payable
Notes Receivable
Prepaid Insurance
Prepaid Rent
Answer
Answer
Accounts Payable
Accounts Receivable
Accumulated Depreciation
Advertising Expense
Allowance for Doubtful Accounts
Bad Debt Expense
Cash
Notes Payable
Notes Receivable
Prepaid Insurance
Prepaid Rent
Answer
To record estimated bad debt for the year
Expert Solution
Journal Entry:
|
Date |
Accounting Title and Explanation |
Debit |
Credit |
| Dec 31 2019 | Bad Debts Expense | 4,150 | |
| Allowance for Bad Debts | 4,150 | ||
| (To record Estimated Uncollectible Accounts) |
Workings:
Allowance for Bad Debts = Net credit Sales * % of Uncollectable
= $830,000 * 0.5%
=$4,150
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