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Question - Oriole Companyuses the percentage-of-receivables basis to record bad debt expense and concludes that 2% of accounts receivable will become uncollectible. Accounts receivable are $391,900 at the end of the year, and the allowance for doubtful accounts has a credit balance of $2,903.
Required -
(a) Prepare the adjusting journal entry to record bad debt expense for the year.
(b) If the allowance for doubtful accounts had a debit balance of $827 instead of a credit balance of $2,903, prepare the adjusting journal entry for bad debt expense.
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