Calculating Bad Debts: Journal Entries & Allowance for Doubtful

E7-9 (Calculating Bad Debts and Preparing Journal Entries) The trial balance before adjustment of Chloe Inc. shows the following balances: Dr. Cr. Accounts receivable $105,000 Allowance for doubtful 1,950 accounts Sales revenue (all on credit) $684,000 Sales returns and allowances 30,000 Instructions a. Give the entry for bad debt expense for the current year assuming: 1. The allowance should be 4% of gross accounts receivable. 2. Historical records show that, based on accounts receivable aging, the following percentages will not be collected: Percentage Estimated Balance to Be Uncollectible 0-30 days outsta $36,000 1% 360 31-60 days outstanding 48,000 5% 2400 61-90 days outstanding 12,200 12% 1464 Over 90 days outstanding 8,800 18% 1584 $5,808.00 3. Allowance for Doubtful Accounts is $1,950 but it is a credit balance and the allowance should be 4% of gross accounts receivable. 4. Allowance for Doubtful Accounts is $1,950 but it is a credit balance and historical records show that the same percentages in part 2 are to be used to determine the Allowance for Doubtful Accounts. Debit Credit Bad Debt Expense 5,150 Allowance for Doubtful Accounts 6,150 Bad Debt Expense 7,758 2 llowance for Doubtful Accounts 7,758 Bad Debt Expense 2,250 3 Allowance for Doubtful Accounts 2.250 Bad Debt Expense 3,858 Allowance for Doubtful Accounts 3,858