At each calendar year-end, Rivka Supply Co. uses the percent of accounts receivable method to estimate bad debts. On December 31, 2009, it has outstanding accounts receivable of $139,500, and it estimates that 2% will be uncollectible.Required: Prepare the adjusting entry to record bad debts expense for year 2009 under the assumption that the Allowance for Doubtful Accounts has (Omit the “$” sign in your response):(a) a $2,371 credit balance before the adjustment. (b) a $487 debit balance before the adjustment.
At each calendar year-end, Rivka Supply Co. uses the percent of accounts receivable method to estimate bad debts.
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