mazie supply company uses the percent of accounts receivable method. on december 31, it has outstanding…

mazie supply company uses the percent of accounts receivable method. on december 31, it has outstanding accounts receivable of $149,000, and it estimates that 3% will be uncollectible. prepare the year - end adjusting entry to record bad debts expense under the assumption that the allowance for doubtful accounts has: (a) a $2,533 credit balance before the adjustment. (b) a $745 debit balance before the adjustment. view transaction list journal entry worksheet 1 2 prepare the year - end adjusting entry to record bad debts expense under the assumption that the allowance for doubtful accounts has a $2,533 credit balance before the adjustment. note: enter debits before credits. transaction general journal debit credit (a)

mazie supply company uses the percent of accounts receivable method. on december 31, it has outstanding accounts receivable of $149,000, and it estimates that 3% will be uncollectible. prepare the year - end adjusting entry to record bad debts expense under the assumption that the allowance for doubtful accounts has: (a) a $2,533 credit balance before the adjustment. (b) a $745 debit balance before the adjustment. view transaction list journal entry worksheet 1 2 prepare the year - end adjusting entry to record bad debts expense under the assumption that the allowance for doubtful accounts has a $2,533 credit balance before the adjustment. note: enter debits before credits. transaction general journal debit credit (a)

Answer

Explanation:

Step1: Calculate required allowance balance

The outstanding accounts receivable is $149,000 and 3% is estimated uncollectible. So the required ending allowance balance is $149,000\times 0.03=$4,470$.

Step2: Calculate bad - debts expense for (a)

The allowance has a $2,533 credit balance before adjustment. Bad - debts expense = Required ending allowance - Existing credit balance. So, bad - debts expense = $4,470 - 2,533=$1,937$.

Step3: Calculate bad - debts expense for (b)

The allowance has a $745 debit balance before adjustment. Bad - debts expense = Required ending allowance+Existing debit balance. So, bad - debts expense = $4,470+745=$5,215$.

(a)

Transaction General Journal Debit Credit
(a) Bad Debts Expense $1,937$
Allowance for Doubtful Accounts $1,937$

(b)

Transaction General Journal Debit Credit
(b) Bad Debts Expense $5,215$
Allowance for Doubtful Accounts $5,215$