Reference no: EM132681429

Problem - Providing for doubtful accounts

At the end of the current year, the accounts receivable account has a debit balance of $1,275,000 and net sales for the year total $16,000,000. Determine the amount of the adjusting entry to provide for doubtful accounts under each of the following assumptions:

a. The allowance account before adjustment has a debit balance of $5,000. Bad debt expense is estimated at 1⁄2 of 1% of net sales.

b. The allowance account before adjustment has a debit balance of $5,000. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $77,000.

c. The allowance account before adjustment has a credit balance of $7,500. Bad debt expense is estimated at 1⁄4 of 1% of net sales.

d. The allowance account before adjustment has a credit balance of $7,500. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $43,500.