Question

Stellar, Inc. had net sales in 2020 of $1,508,000. At December 31, 2020, before adjusting entries, the balances in selected accounts were Accounts Receivable $393,100 debit, and Allowance for Doubtful Accounts $3,490 credit. If Stellar estimates that 8% of its receivables will prove to be uncollectible.

Required:
Prepare the December 31, 2020, journal entry to record bad debt expense.

Answer 1

Answer: See attachment

Explanation:

The following can be gotten from the question:

Account receivable = $393,100

Allowance for Doubtful Accounts = $3,490

Since Stellar estimates that 8% of its receivables will prove to be uncollectible. This will be:

= ($393,100 × 8%) - $3490

= $31448 - $3490

= $27958

The journal entry to record bad debt expense has been attached