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Prepare the adjusting entry to record bad debts expense

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Question - Amigos Industries gathered the following information from its accounting records for the year ended 31 December 20X9, prior to adjustment:

Net credit sales for the year $730,000

Accounts receivable balance, 31 Dec. 20X9 142,000

Allowance for bad debts balance, 31 Dec. 20X9 1,850 dr.

Amigos uses the allowance method of accounting for bad debts and estimates bad debts expense at 1.5% of net credit sales.

Required -

a) Prepare the adjusting entry to record bad debts expense on 31 December 20X9.

b) Determine the balance in allowance for bad debts after the adjusting entry is prepared.

c) Show how the receivables would be reported on the 31 December 20X9, balance sheet for Amigos Industries.

Reference no: EM132521687

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