Reference no: EM132993388

Problem 1: RK uses the percentage of accounts receivable (allowance) method to account for bad debt. The Co had net credit sales of $1.2 million of which $200,000 remains uncollected. Jung's accountant estimates that uncollectable accounts at the end of the year would be $14,000 and the Co currently has 4,000 dr in its allowance account. Which of the following would be the correct journal entry to record the bad debt expenses at the end of the year

Option 1: Debit bad debt expense $14,000 ; credit allowance for doubtful account $14,000
Option 2: None of the above
Option 3: debit bad debt expense $20,000 ; credit allowance for doubtful accounts $20,000
Option 4: Debit bad debt expense $10,000 credit accounts receivable $10,000
Option 5: Debit allowance for doubtful account, $14,000 credit bad debt expense $14,000