Acc280 Financial Accounting: BE8-5 Jaya Co. uses the percentage of receivables basis

Acc280 Financial Accounting

BE8-5
Jaya Co. uses the percentage of receivables basis to record bad debts expense and concludes that 2% of accounts receivable will become uncollectible. Accounts receivable are $500,000 at the end of the year, and the allowance for doubtful accounts has a credit balance of $1,500.
(a) Prepare the adjusting journal entry to record bad debts expense for the year.
(b) If the allowance for doubtful accounts had a debit balance of $600 instead of a credit balance of $1,500, prepare the adjusting journal entry for bad debts expense.
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