Samson Corporation had sales of $1,000,000 during 2012, of which 80 percent were on credit. On December 31, 2012, Accounts Receivable totaled $80,000 and Allowance for Bad Debts had a credit balance of $1,200. Given the preceding information, if uncollectible receivables are estimated to be 1/2 of 1 percent of credit sales, the adjusting entry to account for uncollectible receivables as of December 31, 2012, would include a

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The calculation for the estimate of uncollectible receivables is $1,000,000 x 80% x 0.5% = $4,000. Since the Allowance for Bad Debts already has a credit balance of $1,200, we need to increase it to a total of $4,000. Therefore, we need to credit the Allowance for Bad Debts for $2,800 (which will bring the balance up to $4,000) and the corresponding entry would be a debit to Bad Debt Expense for $2,800. Thus, the adjusting entry would include a credit to the Allowance for Bad Debts of $2,800 and a debit to Bad Debt Expense of $2,800. Therefore, the correct answer is D.

Samson Corporation Had Sales of $1,000,000 During 2012, of Which