Question

Assume instead Rogala Foods uses the aging of accounts receivable method and estimates that $70 of its Accounts Receivable will be uncollectible. Prepare the adjusting journal entry required at December 29, 2018, for recording Bad Debt Expense.

Answer 1

The adjusting journal entry

Debit: Bad Debt Expense $70

Credit: Allowance for Doubtful Accounts $70

The adjusting journal entry required at December 29, 2018, for recording Bad Debt Expense using the aging of accounts receivable method:

Date: December 29, 2018

Description: Bad Debt Expense

Debit: Bad Debt Expense $70

Credit: Allowance for Doubtful Accounts $70

This entry will increase the Bad Debt Expense account by $70 and increase the Allowance for Doubtful Accounts account by $70.

This will reflect the estimated amount of Accounts Receivable that Rogala Foods expects to be uncollectible.