Reference no: EM132709561

Problem - Providing for doubtful accounts - At the end of the current year, the accounts receivable account has a balance of $2,875,000 and sales for the year total $34,500,000. Determine the amount of the adjusting entry to provide for doubtful accounts under each of the following independent assumptions:

a. The allowance account before adjustment has a negative balance of $(18,500). Bad debt expense is estimated at 1⁄2 of 1% of sales.

b. The allowance account before adjustment has a negative balance of $(18,500). An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $200,000.

c. The allowance account before adjustment has a positive balance of $9,000. Bad debt expense is estimated at 3⁄4 of 1% of sales.

d. The allowance account before adjustment has a positive balance of $9,000. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $255,000.