Corporate Financial Accounting 14th Edition by Carl Warren,James Reeve,Jonathan Duchac

Exercise 38

Providing for doubtful accounts
At the end of the current year, the accounts receivable account has a debit balance of $2,950,000 and sales for the year total $27,400,000. Determine the amount of the adjusting entry to provide for doubtful accounts under each of the following assumptions:
A. The allowance account before adjustment has a debit balance of $9,500. Bad debt expense is estimated at ¾ of 1% of sales.
B. The allowance account before adjustment has a debit balance of $9,500. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $188,000.
C. The allowance account before adjustment has a credit balance of $31,400. Bad debt expense is estimated at ½ of 1% of sales.
D. The allowance account before adjustment has a credit balance of $31,400. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $175,000.