Answer:
the adjusting entry:
Dr Bad debt expense 6,600
Cr Allowance for doubtful accounts 6,600
Explanation:
accounts receivable balance = $220,000
total credit sales = $2,210,000
estimated uncollectible accounts = $220,000 x 5% = $11,000
allowance for doubtful accounts = $4,400 credit balance
bad debt expense = $11,000 - $4,400 = $6,600
Allowance for doubtful accounts is a contra asset account that reduces the carrying value of accounts receivable account, that is why its normal balance should be a credit balance.
