Rankine Company estimates its bad debts expense by aging its accounts receivable and applying percentages to various age groups of the accounts. Rankine calculated a total of $8,000 in possible credit losses as of December 31. Accounts Receivable has a balance of $256,000, and the Allowance for Doubtful Accounts has a credit balance of $1,000 before adjustment at December 31. What is the December 31 adjusting entry to provide for credit losses? General Journal Description Debit Credit Answer Answer Answer Answer Answer Answer What is the net amount of accounts receivable that should be included in current assets?

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Business

Gabrielle Griffith

25 February, 01:07

Rankine Company estimates its bad debts expense by aging its accounts receivable and applying percentages to various age groups of the accounts. Rankine calculated a total of $8,000 in possible credit losses as of December 31. Accounts Receivable has a balance of $256,000, and the Allowance for Doubtful Accounts has a credit balance of $1,000 before adjustment at December 31. What is the December 31 adjusting entry to provide for credit losses? General Journal Description Debit Credit Answer Answer Answer Answer Answer Answer What is the net amount of accounts receivable that should be included in current assets?

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Clinton Woodard · Answer 1

Net amount of accounts receivable that should be included in current assets:

= Accounts receivable - Allowance for doubtful accounts

= $256,000 - $8,000

= $248,000

The journal entry is as follows:

Bad debt expense[$8,000 - $1,000] A/c Dr. $7,000

To Allowance for doubtful accounts $7,000

(To record the bad debt expense)