Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment), and bad debt expense is estimated at 3% of net credit sales. If net credit sales are $300,000, the amount of the adjusting entry to record the estimated uncollectible accounts receivables is

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The amount of bad debt expense would be 3% of net credit sales, which is $9,000 ($300,000 x 0.03). To record this expense, Allowance for Doubtful Accounts needs to be debited for $9,000. Since the Allowance for Doubtful Accounts currently has a credit balance of $500, the adjusting entry would be to debit Allowance for Doubtful Accounts for $8,500 ($9,000 - $500) and credit Bad Debt Expense for $8,500. Therefore, the adjusting entry would be for $8,500.

Allowance for Doubtful Accounts Has a Credit Balance of $500