Blackhorse Productions, Inc., used the aging of accounts receivable method to estimate that its Allowance for Doubtful Accountsshould be $23,550. The account had an unadjusted credit balance of $11,900 at that time.a. The appropriate bad debt adjustment was recorded.b. Later, an account receivable for $2,900 was determined to be uncollectible and was written off.Required:For each transaction listed above, indicate the amount and direction +for increase or -for decrease) of effects on the financialstatement accounts and on the overall accounting equation. (Enter any decreases to Assets, Liabilities, or Stockholders Equity with aminus sign.)AssetsLiabilitiesStockholders' Equity
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Blackhorse Productions, Inc., used the aging of accounts receivable method to estimate that its Allowance for Doubtful Accounts should be $23,550. The account had an unadjusted credit balance of $11,900 at that time. a. The appropriate bad debt adjustment was recorded. b. Later, an account receivable for $2,900 was determined to be uncollectible and was written off. Required: For each transaction listed above, indicate the amount and direction +for increase or -for decrease) of effects on the financial statement accounts and on the overall accounting equation. (Enter any decreases to Assets, Liabilities, or Stockholders Equity with a minus sign.) Assets Liabilities Stockholders' Equity
In this question, we need to explain the effect of appropriate bad debt adjustment.
We need to make the Allowance for bad debt accounts as $ 23,990. There is credit balance of $ 11,900 in the account. So we will add the difference of the two accounts to make the account standing at $ 23,990
The difference will be -
$ 23,550 - $ 11,900 = $ 11,650.
The journal entry to be recorded for this is -
Bad Debt Expense Dr. $ 11,650
Allowan...
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Accounting
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