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14 April, 01:25

Madison Inc. reported sales of $1,000,000, a debit balance in Accounts Receivable of $80,000, and a credit balance of $5,000 in the Allowance for Doubtful Accounts. Management anticipates bad debt losses of 1% of credit sales. Prepare the end-of-period adjusting entry to record bad debt expense

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  1. 14 April, 03:06
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    The answer follows below;

    Explanation:

    Sales=$1,000,000

    Allowance for Doubtful Accounts=$1,000,000*1%=$10,000

    Bad Debt Expense Dr.$10,000

    Allowance for Bad Debts Accounts = Cr.$10,000

    In sales % method, we record only % of sales as uncollectible.
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