Alpha Company's accounts receivable and allowance for doubtful accounts balances were $100,000 and $14,000 (credit) respectively, at the beginning of 2019. During 2019, a customer defaults on a $12,000 balance related to goods purchased during 2017. By the end of the year, the company had made credit sales of $2,400,000 and collected $2,200,000 on account.  It now estimates that 1 percent of its credit sales will default.  
A)Prepare the journal entry to record the write off the bad debt.  B)Prepare the adjusting entry to record bad debt expense for 2019.  C)What is the net accounts receivable balance at the end of the year?

What will be an ideal response?

   Debit  CreditA)Allowance for Doubtful Accounts12,000     Accounts Receivable 12,000     B)Bad Debt Expense24,000     Allowance for Doubtful Accounts 24,000  ($2,400,000 × 1% = $24,000)       C)       A/R ($100,000 + 2,400,000 - 2,200,000 - 12,000)$288,000         Less: Allow. for doubtful accts ($14,000 - 12,000 + 24,000)  26,000   Net accounts receivable$262,000   

Business

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