How would I journalize the following for December 31:
Allowance for Doubtful Account credit balance of $2500 in the trial balance, assuming bad debts are 1% of net sales and 10% of accounts receivable.© BrainMass Inc. brainmass.com June 3, 2020, 6:32 pm ad1c9bdddf
The sales are $840,000 and Sales Returns and Alloawances are $40,000. The net sales are $800,000.
1. Bad Debts are 1% of credit sales
The amount would be 800,000X1% = $8,000
The journal entry would be
Bad Debt ...
The solution explains the calculation of bad debt expense under percentage of sales and percentage of receivables method and the related journal entry.