Helix Company has a $280,000 balance in Accounts Receivable and a $2,000 debit balance in Allowance for Doubtful Accounts. Credit sales for the period totaled $1,800,000. What is the amount of the bad debt adjusting entry if Helix uses a percentage-of-receivables basis (at 10%)?
A) $30,000.
B) $28,000.
C) $32,000.
D) $30,400.

Question

Quizplus · Accepted Answer

The bad debt adjusting entry is calculated as follows:Bad debt expense = Credit sales * Bad debt percentageBad debt expense = $1,800,000 * 10%Bad debt expense = $180,000The adjusting entry is:Bad debt expense $180,000Allowance for doubtful accounts $180,000

Helix Company Has a $280,000 Balance in Accounts Receivable and a $2,000