At each calendar year-end, Mazie Supply Co. uses the percent of accounts receivable method to...
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Accounting
At each calendar year-end, Mazie Supply Co. uses the percent of accounts receivable method to estimate bad debts. On December 31, 2016, it has outstanding accounts receivable of $145,000, and it estimates that 3% will be uncollectible.
Prepare the adjusting entry to record bad debts expense for year 2016 under the assumption that the Allowance for Doubtful Accounts has:
(a) a $2,465 credit balance before the adjustment.
(b) a $725 debit balance before the adjustment.
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