Question

Sage Hill Distributors, Inc. had net sales in 2017 of $2,620,000. At December 31, 2017, before adjusting entries, the balances in selected accounts were Accounts Receivable $520,000 debit, and Allowance for Doubtful Accounts $2,900 debit. If Sage Hill estimates that 6% of its receivables will prove to be uncollectible, prepare the December 31, 2017, journal entry to record bad debt expense. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Answer:

Explanation:

The journal entry to record the bad debt expense is shown below:

Bad debt expense A/c Dr $34,100

 To Allowance for doubtful debts $34,100

(Being bad debt expense is recorded)

The computation of the bad debt expense is shown below:

= (Accounts receivable × estimated percentage given ) + (debit balance of Allowance for Doubtful Accounts)

= ($520,000 × 6%) +  ($2,900)

= $31,200 + $2,900

= $34,100