Journal entries of bad debt amounts

Reference no: EM1357329

Please help explain how to understand this problem.

On December 31, of the current year, a company's unadjusted trial balance revealed the following: Accounts receivable of $185,600; Sales Revenue of $1,280,000; (75% were on credit), and Allowance for Doubtful Accounts of $1,600 (credit balance).

Prepare the adjusting journal entry to record the estimate for bad debts assuming:

1. 6% of the accounts receivable balance is assumed to be uncollectible.

2. Bad debts expense is estimated to be 1.5% of credit sales.

Reference no: EM1357329

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