Allowance for Doubtful Accounts has a debit balance of $500 at the end of the year (before adjustment), and uncollectible accounts expense is estimated at 4% of net sales. If net sales are $600,000, the amount of the adjusting entry to record the provision for doubtful accounts is

Question

Business

Kareem Guzman

29 July, 01:21

Allowance for Doubtful Accounts has a debit balance of $500 at the end of the year (before adjustment), and uncollectible accounts expense is estimated at 4% of net sales. If net sales are $600,000, the amount of the adjusting entry to record the provision for doubtful accounts is

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Answers (1)

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Giana Campbell · Answer 1

adjustment entry = $ 24,000

Explanation:

given data

debit balance = $500

net sales = $600,000

uncollectible accounts expense = 4%

solution

we know that when we have bad debt expense that is based on % of net sales and existing balance is Allowance for Doubtful account is not considered

so here adjustment entry will be in account

adjustment entry = 4% of net sales

put here value

adjustment entry = 4 % * $ 600,000

adjustment entry = $ 24,000