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Cullumber Company reports the following financial information before adjustments. Dr. Cr. Accounts receivable 76,000 Allowance for doubtful accounts 900 Sales revenue (all on credit) 740,000 Sales returns and allowances 33,000 Prepare the journal entry to record Bad Debt Expense assuming Cullumber Company estimates the necessary allowance for doubtful accounts at (a) 2% of accounts receivable.

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Answer and Explanation:

The journal entry to record the bad debt expense is shown below;

Bad Debt expenses (2% of $76,000 - $900) $620

      To Allowance for Doubtful debts $620

(Being the bad debt expense is recorded)

here the bad debt expense is debited as it increased the expense and credited the allowance for doubtful debt as it decreased the assets  

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