Prior to the Year-End Adjustment to Record Bad Debt Expense

Question 108

Not Answered

Prior to the year-end adjustment to record bad debt expense the ledger of Stickler Company included the following accounts and balances:

 Allowance for Doubtful Accounts$1,000 Bad Debt Expense0 Accounts Receivable200,000\begin{array}{lccc}\text { Allowance for Doubtful Accounts} & \$1,000 \\ \text { Bad Debt Expense} & 0 \\\text { Accounts Receivable} & 200,000 \\\end{array}
Cash collections on accounts receivable during 2010 amounted to $450,000.Sales revenue during 2010 amounted to $800,000,of which 75% was on credit,and it was estimated that 2% of the credit sales made in 2010 would ultimately become uncollectible.
Determine the balances of the allowance for doubtful accounts and bad debt expense after the adjusting entry to record bad debt expense was made.The allowance for doubtful accounts has a credit balance prior to the adjusting entry.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents