Respuesta :
Answer:
Bad Debts Expense A/c Debit $6,700
To Allowance for Doubtful Debts $6,700
Explanation:
Total sales = $700,000
Total receivables balance at year end = $150,000
Estimate of allowance for doubtful debts = 5%
Therefore, balance of allowance for doubtful debts at year end shall be =
$150,000 [tex]\times[/tex] 5 % = $7,500
Existing balance of allowance for bad debts = $800 Cr.
Balance to be added = $7,500 - $800 = $6,700
For which entry will be
Bad Debts Expense A/c Debit $6,700
To Allowance for Doubtful Debts $6,700
Further Bad Debt Expense will be transferred to Income Statement and Allowance for Doubtful Debts will be shown as negative value from Accounts Receivables.
