Answer:
The adjusting entry to be made at the end of the current year to record its estimated bad debts expense will be:
Debit Bad debt expense $67,660
Credit Allowance for doubtful accounts $67,660
(To record bad debt expense)
Explanation:
The company uses the percent of sales method to determine its bad debts expense.
3.0% of credit sales ($2,210,000) = $66,300
Balance in Allowance for Doubtful Accounts $1,360 Debit
Required bad debt expense = $66,300 + $1,360 = $67,660
The addition of the opening debit balance is necessary in order to reinstate the allowance account to $66,300.
