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sully corporation uses an allowance method for accounting for bad debt expense. sully estimates that 2% of sales will eventually become uncollectible. if sully has $100,000 of credit sales and $100,000 of cash sales during the year, the adjustment for estimated uncollectible accounts will require a multiple choice question. debit to bad debt expense for $4,000. debit to allowance for uncollectible accounts for $2,000. credit to accounts receivable for $2,000. debit to bad debt expense for $2,000. credit to bad debt expense for $2,000. credit to allowance for uncollectible accounts for $4,000.

Answer :

During the year, for sully corporation, the adjustment for estimated uncollectible accounts will require a debit to Bad debt expense of $4,000.

A bad debt expense is recognized when a receivable is no longer collectible because a customer is unable to fulfill their obligation to pay an outstanding debt due to bankruptcy or other financial problems. Given,

cash sales =$100,000

credit sales = $100,000

Total sales = credit sales + cash sales

Total sales = $200,000

Sales estimate =2%

Allowance for uncollectible debt = 200,000*2%

Allowance = $4000

So we can say that, for sully corporation, the adjustment for estimated uncollectible accounts will require a debit to Bad debt expense of $4,000.

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