Oriole Company uses the percentage of receivables method for recording bad debt expense. The accounts receivable balance is $ 603000 and credit sales are $ 2730000. Management estimates that 4% of accounts receivable will be uncollectible. What adjusting entry will Oriole Company make to record bad debt expense if the Allowance for Doubtful Accounts has a $ 4500 credit balance before adjustment? Bad Debt Expense 24120 Accounts Receivable 24120 Bad Debt Expense 19620 Allowance for Doubtful 19620 Accounts Bad Debt Expense 19620 Accounts Receivable 19620
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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