Chapter 16, Problem 2CE

### College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

Chapter
Section

### College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

# Toni’s Tech Shop has total credit sales for the year of $170,000 and estimates that 3% of its credit sales will be uncollectible. Allowance for Doubtful Accounts has a credit balance of$275.Prepare the adjusting entry at year-end for the estimated bad debt expense. (a) Based on an aging of its accounts receivable, Kyle’s Cyclery estimates that $3,200 of its year-end accounts receivable will be uncollectible. Allowance for Doubtful Accounts has a debit balance of$280 at year-end. Prepare the adjusting entry at year-end for the estimated uncollectible accounts.

(a)

To determine

Record the adjusting entry at year-end for the estimated bad debt expense.

Explanation

Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense.

Record the adjusting entry at year-end for the estimated bad debt expense:

 Date Particulars Debit Credit Year end Bad debt expense $5,100 Â Â Â Â Allowance for doubtful accounts Â$5,100 Â (To record the adjusting entry of bad debts expense) Â Â

Table (1)

Working note 1:

(b)

To determine

Record the adjusting entry at year-end for the estimated uncollectible accounts.

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