Triple Mint Gum Co. uses the allowance method of accounting for bad debts. Their Allowance for Doubtful Accounts account has a year-end debit balance, prior to adjustment, of $500. The bad debts are estimated at 5% of $200,000, the year-end accounts receivable. Prepare the year end adjusting journal entry for bad debt expense.

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The Answer of Triple Mint Gum Co. uses the allowance method of accounting for bad debts. Their Allowance for Doubtful Accounts account has a year-end debit balance, prior to adjustment, of $500. The bad debts are estimated at 5% of $200,000, the year-end accounts receivable. Prepare the year end adjusting journal entry for bad debt expense.