Question

All sales are made in credit. Based on past experience the company estimates 3.0% of ending account receivable to be uncollectible. What adjusting entry should the company make at the end of the current year to record it's estimated bad debts expense?

Answer 1

Answer:-

The formula to determine the amount of the ending estimated bad debts entry is:

Bad Debt Expense = Net sales (total or credit) x Percentage estimated as uncollectible

Adjusting entry :-

Bad debt expenses a/c dr .

___To allowances for doubtful debts a/c

hope it helps..