Reference no: EM132954202

At the beginning of the current period, Newman Corporation had balances in Accounts Receivable of $201,100 and in Allowance for Doubtful Accounts of $9,900 (credit). During the period, Newman had credit sales of $805,800 and collections on account of $769,300.

• Newman uses a perpetual inventory system and determined that the cost of goods sold during the period was $669,500. Newman wrote off as uncollectible accounts receivable of $7,500. However, a $2,800 account previously written off as uncollectible was recovered before the end of the current period. Uncollectible accounts are estimated to total $25,400 at the end of the period.

Problem 1: The adjusting entry to record bad debts expense for the period is:

Option 1: Bad Debt Expense 25,400
Allowance for Doubtful Accounts 25,400

Option 2: Bad Debt Expense 8,000
Accounts Receivable 8,000

Option 3: Bad Debt Expense 20,200
Allowance for Doubtful Accounts 20,200

Option 4: Bad Debt Expense 15,500
Accounts Receivable 15,500

Option 5: None of the above