Bramble Lane Outfitters Ltd.’s aging schedule at 31 December shows a required allowance of 6,370. The Allowance for Doubtful Accounts currently holds a 1,300 CREDIT balance. Record the bad debts adjustment.
Bramble Lane Outfitters Ltd.’s aging schedule at 31 December shows a required allowance of 6,370. The Allowance for Doubtful Accounts currently holds a 1,300 CREDIT balance. Record the bad debts adjustment.
Answer
Dr Bad Debts Expense 5070; Cr Allowance for Doubtful Accounts 5070
Accounts - Bad Debts Expense - Allowance for Doubtful Accounts - Accounts Receivable - Sales Revenue - Cash The target is a 6,370 credit; 1,300 is already there; the entry supplies 6,370 − 1,300 = **5,070**: **Bad Debts Expense** (debit) and **Allowance for Doubtful Accounts** (credit). The trap is booking **6,370** — the target is the ending balance, not the expense. Accounts Receivable is untouched; no specific customer has failed.
Hermanson Vol 1 ch 9 (percentage of receivables; aging); Lyryx Intermediate FA Vol 1 §6.3.1 (aging); Dauderis & Annand §7.4; OpenStax Accounting Vol 1 §9.7 (concept map G8, G11)