Reference no: EM1312624

Calculation of Allowance for doubtful accounts, bad debts.

Near the end of 20B, the ledger of Diko Company included the following accounts and balances:

Allowance for Doubtful Account                     $800 credit balance

Bad Debt Expense                                      0 balance

Account Receivable                                      50,000 debit balance

Cash collections on Account receivable during 20B amounted to $148,500. Sales revenue during 20B amounted to $200,000, of which 75% was on credit, and it was estimated that 2% of the credit sales made in 20B would ultimately become uncollectible. Before adjusting entries were made for 20B, (a) a $600 account was determined to be uncollectible and written off and (b) bad debt expense was recorded to 20B. These adjustments are not reflected in the account balance above.

After the above entries were posted to the ledger, the account balance were as follows (give the amount under the appropriate debit or credit entries)

A   Allowance for doubtful accounts

B   Bad debt expense

C   Account receivable