29. rstcos accounts receivable had a balance of $540,000 at the end of the day on december 31. its allowance…

29. rstcos accounts receivable had a balance of $540,000 at the end of the day on december 31. its allowance for doubtful accounts (allowance) had a credit balance of $30,000. rstco estimated that $43,000 of the accounts receivable will not be collected. what adjusting entry is needed by rstco before releasing its december 31 balance sheet? select... debit bad debts expense $73,000; credit allowance $73,000 debit bad debts expense $13,000; credit allowance $13,000 debit allowance $73,000; credit bad debts expense $73,000 debit allowance $13,000; credit accounts receivable $13,000

29. rstcos accounts receivable had a balance of $540,000 at the end of the day on december 31. its allowance for doubtful accounts (allowance) had a credit balance of $30,000. rstco estimated that $43,000 of the accounts receivable will not be collected. what adjusting entry is needed by rstco before releasing its december 31 balance sheet? select... debit bad debts expense $73,000; credit allowance $73,000 debit bad debts expense $13,000; credit allowance $13,000 debit allowance $73,000; credit bad debts expense $73,000 debit allowance $13,000; credit accounts receivable $13,000

Answer

Explanation:

Step1: Determine the required ending balance of Allowance for Doubtful Accounts

The estimated uncollectible amount of Accounts Receivable is $43,000, so the required ending credit - balance of the Allowance for Doubtful Accounts is $43,000.

Step2: Calculate the adjustment amount

The current credit balance of the Allowance for Doubtful Accounts is $30,000. The adjustment amount is the difference between the required ending balance and the current balance. So, the adjustment amount = $43,000 - $30,000=$13,000.

Step3: Determine the adjusting - entry accounts

To increase the Allowance for Doubtful Accounts (a contra - asset account with a credit balance) and record the Bad Debts Expense, we debit Bad Debts Expense and credit Allowance for Doubtful Accounts.

Answer:

Debit Bad Debts Expense $13,000; credit Allowance $13,000