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22 October, 16:03

Brief Exercise 8-5 Blossom Company uses the percentage-of-receivables basis to record bad debt expense and concludes that 4% of accounts receivable will become uncollectible. Accounts receivable are $419,300 at the end of the year, and the allowance for doubtful accounts has a credit balance of $2,941. Prepare the adjusting journal entry to record bad debt expense for the year.

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  1. 22 October, 20:02
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    The adjusting journal entry to record bad debt expense for the year:

    Debit Bad debts expense $13,831

    Credit Allowance for doubtful accounts $13,831

    Explanation:

    Blossom Company uses the percentage-of-receivables basis to record bad debt expense.

    At the end of the year, Accounts receivable are $419,300 and 4% of accounts receivable will become uncollectible.

    Estimated uncollectible = $419,300 x 4% = $16,772

    Before adjusting, the allowance for doubtful accounts has a credit balance of $2,941.

    Bad debts expense = $16,772 - $2,941 = $13,831

    The adjusting journal entry:

    Debit Bad debts expense $13,831

    Credit Allowance for doubtful accounts $13,831
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