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Percent of accounts receivable method

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At each calendar year-end mazie supply co. uses the percent of account receivable method to estimate bad debits. On December31,2013 it has outstanding accounts receivable of 55000 and estimated that 2% will be uncollectible . prepare the adjusting entry to record bad credit expense for the year 2013 under the assumption that the Allowance for doubtful accounts has (a) a 415 credit balance before the adjustment and (b) a 291 debit balance before the adjustment.

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Your tutorial is attached showing how this method works and showing the computations (click in cells to see).

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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