Gleeson Company's Accounts Receivable Account has a debit balance of $5,400,000, and the Allowance for Doubtful Accounts has a debit balance of $12,000 at the end of the year before adjustment. An analysis of their customers' accounts estimates that 2% of year end account receivable will be uncollectible.
The adjusting journal entry for doubtful accounts will include:

Question

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Estimated uncollectible receivables = $5,400,000 x 2% = $108,000
Required Allowance adjustment = $108,000 - (-$12,000) = $120,000
The year-end adjusting entry:
Bad debts expense 120,000
$\quad $ $\quad $ $\quad $ $\quad $ Allowance for doubtful accounts 120,000
To record the bad debts expense for the year

Gleeson Company's Accounts Receivable Account Has a Debit Balance of $5,400,000