Nichols Company uses the percentage of receivables method for recording bad debts expense.The accounts receivable balance is $250,000 and credit sales are $1,000,000.Management estimates that 4% of accounts receivable will be uncollectible.What adjusting entry will Nichols Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment?

Question

Quizplus · Accepted Answer

The Answer of Nichols Company uses the percentage of receivables method for recording bad debts expense.The accounts receivable balance is $250,000 and credit sales are $1,000,000.Management estimates that 4% of accounts receivable will be uncollectible.What adjusting entry will Nichols Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment?

Nichols Company Uses the Percentage of Receivables Method for Recording