At December 31 of the current year, a company reported the following: Total sales for the current year: $980,000 includes $160,000 in cash salesAccounts receivable balance at Dec. 31, end of current year: $160,000Allowance for Doubtful Accounts balance at January 1, beginning of current year: $7,300 creditBad debts written off during the current year: $5,800.Prepare the necessary adjusting entries to record bad debts expense assuming this company's bad debts are estimated to equal 5% of accounts receivable.

What will be an ideal response?



Dec. 31Bad Debts Expense.......................................... 6,500?
?  Allowance for Doubtful Accounts**..........?6,500
**Required balance ($160,000 * 5%).....................................$8,000
Balance before adjusting entries ($7,300-$5,800)....................1,500
Required adjustment................................................................$6,500

Business

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