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Amount of the bad debt adjusting entry

Bando Company has a $300,000 balance in Accounts Receivable and a $4,000 debit balance in Allowance for Doubtful Accounts. Credit sales for the period totaled $1,800,000. What is the amount of the bad debt adjusting entry if Bando uses a percentage of credit sales basis (at 2%) or a percentage of receivables basis (at 10%)?
% Credit Sales % Receivables
a. $36,000 $30,000
b. $40,000 $26,000
c. $36,000 $34,000
d. $32,000 $26,000

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In credit sales, we do not look at the balance in the allowance account and the adjusting ...

Solution Summary

The solution explains how to calculate the amount of the bad debt adjusting entry

$2.19