Zero Co Uses the Allowance Method of Accounting for Bad Debts

Essay

Zero Co. uses the allowance method of accounting for bad debts. TheirAllowance for Doubtful Accounts account has a year-end debit balance, prior to adjustment, of $800. The bad debts are estimated at 5% of $160,000, theyear-end accounts receivable. Prepare the year end adjusting journal entry forbad debt expense.